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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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Bank of Canada Treads Carefully Amid Stagflation Risks

                                            Bank of Canada in Ottawa

The Bank of Canada is adopting a cautious stance as concerns about stagflation—sluggish economic growth paired with persistent inflation—loom over the Canadian economy. Former governor Stephen Poloz explained that the central bank is currently in risk management mode, balancing the conflicting pressures of weak growth and rising prices.

Poloz noted that the Bank faces a dilemma: cutting interest rates could cushion the blow of slowing growth and rising unemployment, but raising rates might be necessary to keep inflation under control. In such a scenario, the most prudent course of action may be to do very little, carefully monitoring incoming data before making any major policy moves.

This balancing act reflects the uncertainty created by global trade tensions and domestic economic challenges. Businesses and investors remain wary, with the potential for stagflation adding to the complexity of decision-making. Poloz emphasized that the Bank’s approach is not about aggressively steering the economy but rather about managing risks in real time, weighing whether the dangers of weak growth outweigh the threat of higher inflation.

The concept of stagflation, which combines stagnation and inflation, recalls the economic turbulence of the 1970s. While Canada is not yet in a full stagflationary environment, the risk is significant enough to warrant caution. Poloz’s comments highlight the delicate position of policymakers who must navigate between supporting growth and preventing runaway inflation.

For Canadians, this means monetary policy may remain steady in the near term, with the Bank of Canada opting for restraint rather than bold moves. The central bank’s priority is to safeguard economic stability while preparing for potential shocks that could tip the balance toward stagflation.


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