The October 28, 2026 policy rate hike
On October 28, 2026 the Bank of Canada raised its target for the overnight rate by 25 basis points, to 2.50%. The Bank Rate is 2.75%. The deposit rate is 2.45%. The previous target was 2.25%, a level the Bank had held at the September 2 and July 15 decisions. The Bank's opening statement called this the first increase since July 2023.
The press release gives the reason in one line of policy: inflation is higher and more persistent than in the July Monetary Policy Report, growth has picked up, and Governing Council raised the rate to reduce the risk that high energy prices spread into other prices. It also said there could be a need to go further, and that it would proceed carefully. The next overnight-rate announcement is December 9, 2026. The next Monetary Policy Report is January 27, 2027.
The figures in the statement
| Item | Figure | Where it sits |
|---|---|---|
| Overnight target | 2.50% | Raised 25 basis points on October 28, 2026 |
| Bank Rate | 2.75% | 25 points above the target, as usual |
| Deposit rate | 2.45% | 5 points under the target |
| CPI inflation | about 3% | Around that since April. About 3.5% expected by year end |
| CPI excluding gasoline | 2.2% | September |
| Canadian GDP, 2026 | 1% | Then 2% in 2027 and 2028, in this projection |
| Global GDP, 2026 | 3.1% | A small upward revision from July |
| Next decision | Dec 9 | 2026, scheduled |
What this does to a variable mortgage
A variable mortgage is priced off a lender's prime, usually as prime minus a discount. Prime is not the overnight rate. Through the last hold, chartered-bank prime sat 2.20 points above the 2.25% overnight target, at 4.45%. RBC's prime sheet dated for October 28, 2026 still showed 4.450, with a last change date of October 30, 2025. That is the morning file, before lenders reprint prime after a 9:45 a.m. announcement.
If a lender passes the full 25 points into prime, a contract at prime minus 0.90 moves from 3.55% to 3.80% when the discount stays put. On a $500,000 balance amortized over 25 years, the monthly payment goes from $2,509.57 to $2,576.17. That is $66.61 more. Adjustable-payment contracts show it in the payment. Fixed-payment variable contracts can push the extra interest into a longer amortization instead. The contract says which one you have.
What this does not automatically do to a fixed rate
A fixed rate is set from bond yields and the lender's spread, not from today's overnight target. Yields had already been moving before the announcement. A fixed offer you hold in writing keeps its rate until the hold expires. A renewal letter you have not accepted can be replaced by a new letter. Nothing in the Bank's statement reprices a closed fixed term you are already in.
The Bank also said housing is expected to stay relatively weak, and that growth should slow in the fourth quarter of 2026 because of US tariffs before picking up in 2027. That is context for house prices and for how hard a lender will compete. It is not a forecast of your renewal rate.
How to use the decision this week
Write down three numbers from your own papers: the rate, the remaining balance, and whether the payment changes when prime changes. Compare that rate with the reports on the rate board, and read the wording. A 3.99% three-year with cash back is not the same offer as a 4.54% renewal letter. If the letter is the thing in your hand, request cheaper rates and have both a fixed and a variable priced after the hike, not before it.
Related: fixed or variable, how the payment is calculated.