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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 Holds Steady as Middle East Conflict Fuels Inflation Concerns

 

                            A cyclist rides past the Bank of Canada building in Ottawa, Ontario, Canada May 8, 2025.

The Bank of Canada is widely expected to hold its key interest rate steady as policymakers weigh rising inflation risks driven by surging oil prices linked to the Middle East conflict. Economists note that while inflation remains near the midpoint of the target range, geopolitical uncertainty and higher energy costs are adding new pressure to the outlook. 

The Bank of Canada is poised to maintain its benchmark interest rate at 2.25%, even as global tensions push oil prices higher and raise fresh concerns about inflation. Analysts expect the central bank to keep rates unchanged at its March meeting, emphasizing caution amid geopolitical instability and volatile energy markets. 

Canada’s inflation rate currently sits near 2%, comfortably within the Bank’s target range. However, the ongoing conflict in the Middle East—particularly disruptions affecting oil supply—has driven crude prices sharply upward, increasing the risk of future inflationary pressure. Policymakers are expected to acknowledge these risks while signaling that the current rate remains appropriate for supporting a fragile economy. 

Economists note that while Canada, as a net oil exporter, may be somewhat insulated from global price shocks, consumers could still feel the impact of higher energy costs in the months ahead. The Bank’s decision reflects a balancing act between maintaining economic stability and preparing for potential inflation flare-ups tied to geopolitical uncertainty.


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