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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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5 Things to Know Today: Jobs Report, Gas Tax Reprieve and a BoC Rate-Hike Warning

 

Friday, September 4, 2026

It's a loaded Friday: a jobs report lands on both sides of the border this morning, Ottawa just quietly gave drivers several extra months of relief at the pump, and the Bank of Canada's governor put rate hikes back on the table. Here's what matters for your wallet.

1. Jobs day, on both sides of the border

Statistics Canada releases its August Labour Force Survey this morning, alongside the U.S. jobs report, in one of the more closely watched data double-headers of the year. Economists polled by Reuters expect Canada added about 15,000 jobs in August, with unemployment holding at 6.4% - the two-year low set in July, when the economy surprised everyone with a 75,000-job jump. A soft number would reinforce bets that the Bank of Canada stays cautious into the fall; a strong one adds fuel to the rate-hike talk already coming out of Ottawa (see #3).

What it means for you: If you're job hunting or watching mortgage rates, this print matters more than usual - it's one of the last major data points before the Bank of Canada's October 28 decision.

2. Gas tax holiday gets extended into 2027

In a reversal of the original timeline, Finance Minister François-Philippe Champagne announced this week that the federal fuel excise tax holiday - 10 cents a litre on gas, 4 cents on diesel - will now run until January 31, 2027, instead of expiring on Labour Day (September 7) as planned. The tax will then be phased back in at half the normal rate through February and March, returning fully on April 1, 2027. Ontario Premier Doug Ford, who had lobbied for a longer pause, called for it to be made permanent; the Conservatives called it a "modest extension."

What it means for you: The roughly 10-11 cent per litre jump many drivers were bracing for on September 8 isn't happening. Budget your fuel costs at current levels for the next several months rather than padding for an increase.

3. Macklem puts rate hikes back on the table

The Bank of Canada held its policy rate at 2.25% on Wednesday for a seventh straight decision, but Governor Tiff Macklem struck a notably more hawkish tone than in prior meetings, saying policymakers are "prepared to raise interest rates" - possibly more than once - if inflation stays too high. Annual inflation has been running near 3%, a full point above target, driven largely by energy costs tied to the Iran conflict. Money markets have since priced in a possible quarter-point hike as soon as December. The TSX shrugged it off, climbing 1.5% Thursday to 36,633.12 on strength in gold miners and banks.

What it means for you: If you're renewing a mortgage or carrying variable-rate debt, this is the clearest signal in months that rates could move up rather than down. It may be worth pricing out a fixed-rate option before the Bank's October 28 decision.

4. Retaliation tariffs hit in 4 days

Canada's counter-tariffs on U.S. goods take effect Tuesday, September 8, covering six sectors: steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. They're Ottawa's response to the 50% U.S. tariffs that hit roughly $20-28 billion of Canadian exports on August 22 after trade talks collapsed. Economists point to the 2018 steel-and-aluminum retaliation round as a rough precedent, when a similar-sized list translated into higher shelf prices on affected goods within weeks.

What it means for you: Watch prices on major appliances and imported dairy products in particular - those are among the categories most likely to see cost pass-through to consumers first.

5. Loonie holds near a two-week high

The Canadian dollar has firmed to around 1.3806 per U.S. dollar this week, a two-week high, helped along by Macklem's hawkish tone (higher rate expectations tend to support a currency) even as oil prices stay elevated in the mid-$90s for Brent crude on continued Strait of Hormuz tensions.

What it means for you: A firmer loonie takes a little of the sting out of any U.S. dollar purchases - cross-border shopping, travel, or American stocks - if the trend holds into the fall.

This article is for informational purposes only and does not constitute financial advice. Figures are current as of publication and subject to change.

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