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BoC Opens the Door to Rate Hikes: What It Means for Your Mortgage

  Published September 4, 2026 The Bank of Canada held its policy rate at 2.25% on September 2 — the seventh straight hold — but Governor Tiff Macklem didn't sound like a central banker done for the year. He told reporters the Bank is "prepared to raise interest rates, and if it takes more than one increase, we're prepared to do that," if inflation stays too high. That's a real shift in tone, and it lands right as a wave of Canadians hit their mortgage renewal date. Here's what changed, who's forecasting what, and what it actually means for your payment. Why the Bank Suddenly Sounds Hawkish Canada's annual inflation rate has climbed to around 3% — a full point above the Bank's 2% target — and the Bank is pointing squarely at energy prices. Oil has stayed elevated because of the Iran conflict and disruption near the Strait of Hormuz, pushing gas prices up and dragging headline CPI with it. Core inflation, which strips out food and energy, is still s...
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Canada’s inflation uptick in June has effectively ruled out a July rate cut, according to economists and market analysts. The Consumer Price Index rose to 1.9% year-over-year, up from 1.7% in May, driven by higher prices for durable goods like vehicles and furniture, and a smaller decline in gasoline prices.

Core inflation metrics — CPI-median and CPI-trim — remained stubbornly high at 3.1% and 3.0%, respectively, well above the Bank of Canada’s comfort zone. This persistence in underlying inflation, coupled with a surprisingly strong June jobs report showing 83,000 new positions added, has led analysts to conclude that a rate cut at the July 30 meeting is off the table.

BMO Chief Economist Douglas Porter summed up the sentiment: “Today’s result gives the Bank of Canada almost nothing to justify a rate cut in July. If the solid employment report was the icing on the cake for that decision, this is the cherry on top”.

Market expectations have shifted dramatically. The probability of a rate cut has plunged to just 5%, down from 27% before the jobs data and 14% before the CPI release. Economists now suggest that unless there’s a sharp economic downturn or a significant drop in core inflation, the earliest possible rate cut may be in September — and even that is uncertain.

 For now, the Bank of Canada appears poised to hold its benchmark interest rate steady at 2.75%, maintaining a cautious stance amid persistent inflation and global trade uncertainties.

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