Update (October 28, 2026): The Bank of Canada raised its policy rate by 0.25 percentage points to 2.50% — its first hike since July 2023. The Bank Rate is now 2.75% and the deposit rate 2.45%. The big banks raised prime from 4.45% to 4.70%, effective October 29, 2026. The Bank said it acted to reduce the risk that continuing high energy prices spread broadly to other prices, and that further increases could be needed, though it will proceed carefully. Its next decision is December 9, 2026. The rest of this article has been updated to reflect the decision.
On October 28, 2026, the Bank of Canada raised its target for the overnight rate by 25 basis points, from 2.25% to 2.50% — its first hike since July 2023. The hike matched what markets had priced in after Governor Tiff Macklem warned that he sees “no resolution in sight” for the Middle East conflict driving energy prices higher.
You don’t need an economics degree to come out ahead. Here’s what the hike means for your mortgage, savings, GICs, and debt — and what to do about it now.
Where rates stand right now
- Bank of Canada policy rate: 2.50% since October 28, 2026, after seven consecutive holds at 2.25% (most recently September 2, 2026).
- Big-bank prime rate: 4.70% since October 29, 2026, up from 4.45%. By convention, the big banks set prime 2.20 percentage points above the Bank’s policy rate and move it by the same amount — usually effective the day after an announcement.
- Inflation: 3.1% in the year to September (released October 19) — just above the top of the Bank’s 1–3% control range around its 2% target. But the details are softer than the headline: excluding gasoline, prices rose 2.2% (down from 2.4% in August), and the Bank’s preferred core measures cooled — CPI-trim at 1.8% and CPI-median at 1.9%. The headline rise was energy alone: gasoline jumped 27.8% year over year as crude oil climbed to its highest level since May.
Why the Bank hiked: persistently high global energy prices (tied to the war in Iran and fighting around the Strait of Hormuz) have kept gasoline expensive. The Bank said it acted to reduce the risk that continuing high energy prices spread broadly to other prices, and that further increases could be needed, though it will proceed carefully.
What changed at a glance
| What changed | Before | After |
|---|---|---|
| Policy rate | 2.25% | 2.50% |
| Big-bank prime rate | 4.45% | 4.70% (effective October 29, 2026) |
| Variable mortgages / HELOCs | — | Payments rise |
| HISA rates | — | Edge higher over the following weeks |
| GIC rates | — | Likely to tick up |
| Fixed mortgage rates | — | Little direct movement (they follow bond yields) |
What the rate hike means for your money
Variable-rate mortgages and HELOCs: expect a bigger payment
This is the most direct hit. Variable-rate mortgages and home equity lines of credit are priced off prime, so the 0.25-point hike flowed straight through. On a $500,000 mortgage with 25 years remaining, prime moving from 4.45% to 4.70% adds roughly $65–$70 per month to the payment (approximate — your lender’s exact schedule will differ).
If your variable payment is already stretching your budget, now is a good time to ask your lender about converting to a fixed rate — you can usually lock in without a full refinance.
Fixed-rate mortgages and renewals: watch bond yields, not just the announcement
Fixed mortgage rates don’t move with the Bank of Canada directly — they follow Government of Canada bond yields, which often move ahead of an announcement based on expectations. The 5-year bond yield — the benchmark fixed rates follow — spiked to 3.73% in late September and sits around 3.5–3.6% now. The Big Six banks have already raised select fixed rates by a cumulative 10–50 basis points in recent weeks, though a few are trimming again as the yield eases off its peak. If your renewal is coming up in the next 6–12 months, the hike is your cue to start shopping early rather than waiting for renewal letters. It’s worth comparing rates from a few lenders or a mortgage broker before you commit.
Savings accounts: the silver lining
Higher policy rates are good news for savers. High-interest savings accounts typically drift upward in the weeks after a hike, since the banks’ own funding costs move. If you’re sitting in a Big Five chequing account earning effectively zero, the hike makes switching even more worthwhile — see our guide to the best high-interest savings accounts in Canada for where the top ongoing rates are right now.
GICs: timing matters more than usual
GIC rates tend to rise after a hike, but they also move on expectations — meaning some of the increase may already have been priced in. If you were already planning to lock in a 1-year GIC, rates after the decision are worth comparing; if you need the money liquid, a HISA keeps your options open.
Credit cards and lines of credit: variable-rate debt gets pricier
Most unsecured lines of credit are prime-based, so their rates rose with the hike. Credit card purchase rates (typically 19.99%–22.99%) usually don’t move — but carrying a balance at those rates is expensive in any environment. The hike is a good excuse to finally clear revolving debt.
What didn’t happen — and what to watch
The hold scenario did not occur. The Bank signalled further increases are possible but it will proceed carefully. Its next decision is December 9, 2026. The Bank expects inflation around 3.5% by year-end, averaging 3% in 2027, and back to 2% by mid-2028.
Three moves to make now
- Check what kind of debt you actually have. Variable or fixed mortgage? Prime-based line of credit or fixed? You can’t respond to the hike if you don’t know your exposure — five minutes in your banking app is enough.
- Move idle cash to a real savings rate. Money earning 0% in chequing is losing ground to 3.1% inflation. Park it in a high-interest savings account now; you’ll benefit from higher rates automatically after the hike.
- If your mortgage renews within a year, start the conversation early. Brokers can often hold a rate for 90–120 days. Starting now costs nothing and protects you if fixed rates jump.
This is general information, not personalized financial advice. Rate expectations shift constantly — every figure above was updated October 29, 2026 and should be confirmed with official sources before you act. For larger borrowing decisions, consider speaking with a licensed mortgage professional or financial advisor.
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