Variable rates are on the rise, and fixed rates are still under pressure.
Amid heightened inflation risks and trade disruption — will the Bank of Canada's next rate move be a hold or a hike? Dan Eisner, True North CEO, considers the factors and offers his insight alongside industry forecasts to predict where interest and mortgage rates could go.
From a high of 5.0% (July 2023 to June 2024), the Bank of Canada's benchmark interest rate fell substantially to 2.25%, and this October, rose again to 2.50% to get ahead of inflation. The 2026-2027 rate outlook is still mired in ongoing trade and geopolitical uncertainty.
Is the Bank of Canada on the verge of another rate hike cycle? Growing inflation pressures are stacking the deck, despite the economic threat of U.S. trade and tariff mayhem. Is one rate hike enough?
On October 28, 2026 – The Bank of Canada raised its policy rate by 0.25% to 2.50%, the first hike since July 2023. Most big bank prime rates rose to 4.70% (not including lender rate discounts).
The real monster behind this hike isn't an overheating economy, but global inflation pressures closing in.
Stay tuned for the next rate decision on December 9, 2026. Get timely updates — sign up for our newsletter!
00 min 55 sec
Dan Eisner breaks down the impact of the US midterm elections on the Canadian economy, specifically focusing on how a shift in power affects Canadian mortgage rates, US tariffs, and oil prices. Dan discusses the persistence of Trump's trade tactics, the implications of tariffs for US government revenue and debt, and how ongoing tariffs contribute to inflation and weaken the Canadian economy.
Dan Eisner, Founder and CEO of True North Mortgage, is watching signs that could point to a Bank of Canada rate cut, a hold, or a shift in tone that signals the start of another hiking cycle. The next rate decision is coming up — here’s what he’s seeing right now.
The Bank of Canada's (BoC's) policy rate, also called the overnight rate, affects bank prime rates, which in turn move variable mortgage rates. Fixed mortgage rates follow the bond market, which can move in anticipation of changes to the prime rate.
"A rate hike has been delivered. Economists aren't too happy, considering the state of the economy, thinking it's too soon. But the early move also might help keep future hikes to a minimum."
Global inflation risks are building. There's been a lot of discussion about our strained economy and that September's average core inflation still didn't show a broader spread of high energy prices — yet the BoC's 3-month annualized rate, its preferred core measure, rose. Recent BoC surveys also show that businesses and consumers expect price increases to be passed on, with consumers anticipating that inflation will rise to about 4% five years from now.
The Bank of Canada's recent rate hike came amid concerns about persistent inflation from months of tariffs and high oil prices. After the tough pandemic lesson of waiting too long, getting ahead of inflation this time to calm markets and consumer nerves.
Higher prices and borrowing costs are already hitting Canadian budgets, and unchecked energy inflation would further erode savings and spending power, just as we need them to help weather the latest manoeuvres in the U.S. trade war.
But signs of economic softening are gaining, too. October's labour numbers underscore weakness seen in the past couple of months, and the recent policy rate hike will work against a sluggish economy. Canada's projected third-quarter growth has already been downgraded, and higher interest rates won't help the outlook into 2027.
All eyes will be on the next inflation report to gauge whether another hike is coming before year-end.
Could a Middle East resolution quickly ease global inflation concerns? A definitive end to the conflict would likely bring a global sigh of relief. Oil prices dropped after the U.S. midterms, but if tensions escalate, oil and gas prices could remain elevated, with knock-on effects still working their way through the economy for months.
"With the Middle East conflict keeping energy prices higher for longer, and global debt levels adding pressure, the uncertainty is still pointing rates in one direction — up. I'm still seeing at least two more hikes coming, though I'm hoping something changes my mind."
Two more quarter-point hikes would bring the BoC policy rate to 3.00% and the prime rate to 5.20%.
With the first hike in a while delivered in October, we’re seeing how trade disruption, fiscal policy, and global events can create inflationary conditions that might lead to stagflation — high inflation alongside a stalling economy — leaving a central bank raising rates even as growth slows.
If inflation readings continue to rise, more BoC rate hikes into early 2027 could help calm markets. Ideally, that ‘relief’ could moderate Canada’s 5-year bond yield, giving fixed mortgage rates room to dip slightly and perhaps reducing the need for a longer BoC rate hike cycle into 2028, especially if trade weakness weighs on economic growth.
After all, higher bond yields and fixed mortgage rates over the past few months are doing some of the BoC’s tightening work. A couple more prime rate hikes may be enough to bring Canada’s inflation expectations back in line.
"Many factors will influence whether the Bank of Canada will follow up with a back-to-back hike in December — like what the recent shift in control of the U.S. Congress could mean for trade or oil prices, and our next CPI reading."
Market projections for another BoC rate hike on December 9:
The magic number in calling the rate-decision odds is usually 60%.
Source: As of November 6, 2026, mortgagelogic.news
Keep in mind that predicting interest rates is a 50/50 game, but if we don't attempt to forecast, we can't help prepare or protect our mortgage clients.
According to the historical chart above (1999 to 2026), the Bank of Canada’s policy rate peaked at 5.0% in June 2023, fell to 2.25% by October 2025, and rose to 2.50% in October 2026. Its highest level since 1999 was 5.75%, reached in May 2000 and held until January 2001.
| Factor | Latest Reading | Signal for BoC Rate Move | Next Reading |
|---|---|---|---|
| Inflation (most important factor) | September 2026 CPI: headline 3.1% on energy prices; core average eased to 1.9% from 2.0%; the BoC’s preferred 3-month annualized core rate rose to 2.6% from 2.3% | Hike, based on the forward inflation curve | November 16 |
| Labour market | October 2026 jobs report: 4.7K jobs lost; unemployment rate rose by 0.2% to 6.7% | Pause | December 4 |
| Wages | October 2026: average wage growth fell by 0.1% to 2.2%, below current headline inflation | Pause | December 4 |
| Economic growth | August 2026 real GDP: flat, same as July; September tracking -0.1%; Q3 projected at a 1.3% annualized pace | Pause | November 30 (September and Q3) |
| Bond yields | 5-year Canada bond yield eased to around 3.3% after the U.S. midterms and a drop in oil prices; 5-year fixed rates may ease slightly | Shaky Hike | Daily Movements |
Want a deeper dive into the factors? Read more here
What's the most important economic factor the Bank of Canada considers? The BoC's sole mandate is to control inflation. It uses its policy interest rate (which directly influences bank prime rates) to keep headline inflation close to its 2.0% target and core inflation within the 1.0%-3.0% range.
Other key economic factors (like long-term bond yields) can help the BoC assess inflation's path (cooling vs persistent vs dare we say 'transitory') and whether its policy rate should decline, rise, or hold.
For example, rising unemployment and slow GDP growth may cool inflation and allow for a rate cut to stimulate the economy. However, rising inflation may indicate the need to pause or raise rates to curb demand and keep inflation in check.
Use these economic benchmarks to see how close or far today's numbers are:
Note: These numbers are illustrative and subject to change based on new economic realities, such as shifts in population growth.
| BoC Rates: Forecaster | End 2026 | End 2027 | Expected Path |
|---|---|---|---|
| National Bank | 2.50% | 3.00% | 2.75% in Q1 2027, 3.00% in Q2 2027, hold through 2028 |
| TD Economics | 2.50% | 2.25% | 2.75% in Q1 2027, then cuts in Q3 and Q4; averaging 2.25% through 2032 |
| Scotiabank | 2.50% | 3.25% | Gradual hikes through 2027, hold at 3.25% through 2028 |
| CIBC Economics | 2.50% | 2.75% | 2.75% by March 2027 and hold through 2028 |
| RBC | 2.50% | 3.25% | Hikes begin Q1 2027; hold at 3.25% through 2028 |
| BMO Capital Markets | 2.50% | 2.75% | 2.75% in Q1 2027 |
| Desjardins | 2.50% | 2.75% | 2.75% in Q1 2027 |
| Capital Economics | 2.50% | 3.00% | 2.75% in Q1 2027, 3.00% in Q2 2027; holding through 2028 |
| Oxford Economics | 2.50% | 2.75% | 2.75% in December 2026 or January 2027 |
| Median of forecasts listed | 2.50% or 2.75% | 2.75% | |
| Range | 2.50% to 2.75% | 2.25% to 3.25% |
Forecasts as of October 30, 2026, subject to change. Median and range calculated by True North Mortgage from the forecasts listed. Most forecasts assume an eventual favourable trade outcome. Trade uncertainty and higher energy prices from the Iran conflict could shift these rate forecast paths.
The Bank of Canada's published neutral rate range, which estimates the rate position that neither stimulates nor constrains economic activity, is 2.25% to 3.25%.
The BoC rate currently sits at the low end of that range. Economic conditions may prompt an adjustment to the neutral rate range, rising or lowering depending on several factors that indicate a rate level supporting a healthy economy.
If the economy shows greater weakness than expected, even a rate in the neutral range can feel restrictive, which is why the BoC frames its policy stance as either supportive or restrictive.
| Year | Implied BoC Rate Path | Prime Rate | % Change |
|---|---|---|---|
| 2026 | 2.50% | 4.70% | +0.25% |
| 2027 | 3.50% | 5.70% | +1.0% |
| 2028 | 3.50% | 5.70% | - |
| 2029 | 3.50% | 5.70% | - |
| 2030 | 3.50% | 5.70+ | - |
Source: mortgagelogic.news as of October 30, 2026, subject to change. Implied Bank of Canada policy rate and prime rate path over the next 5 years as per the bond market, derived from CORRA forwards and overnight index swap pricing. Canada's benchmark prime rate is currently 220 bps above the BoC policy rate.
Fixed mortgage rates are steered by the Canadian bond market and (eventually) follow the movements in bond yields up or down. 5-year bond yields are the standard for setting 5-year fixed rates and are the reference in this section and blog.
Canada's 5-year bond yield has eased to around 3.3% as markets digest the U.S. midterm results and a drop in oil prices, alongside the ongoing Iran conflict, the U.S. trade war, and the rapid pace of AI spending and borrowing.
Fixed rates remain under pressure, but may move up and down slightly in a tight range as bond yields react to emerging factors.
Factors pressuring yields:
On the moderation side, offsetting inflationary pressures:
Ongoing uncertainty will continue to drive market volatility. We can all likely agree we've seen enough volatility and would like to see something in a less volatile colour.
Fixed mortgage rates won't drop substantially until yields do. Yields are unlikely to enter a sustained downward trend unless deeper economic softening gains momentum and inflation pressures ease. Fixed rates may fluctuate within a tight range for a while, but lender margins remain tight and may not lower rates even if yields ease.
Mortgage rate deals may emerge depending on prevailing bond-yield conditions. It's a good time to lock in a mortgage rate hold if you're looking to buy a home or renew your mortgage, as fixed-rate movement is likely to resemble a rollercoaster for the next while, or at least until we see clarity on geopolitical activity and U.S. trade.
Note: *Annual Averages. Source: National Bank; TD Economics; As of October 2026. 5-year fixed rate outlook reflects True North Mortgage’s current spread of just under 1 percentage point over the 5-year bond yield. It is not a lender quote. Actual rates vary by lender and borrower profile, and the outlook may change as market conditions shift. |
The Bank of Canada preschedules 8 interest rate announcement dates per year, spaced roughly every 6 to 8 weeks. The BoC has rarely announced a rate change on an unscheduled date, though it has the mandate to do so if necessary.
On these dates, the BoC sets its benchmark rate, announcing a cut, hold, or raise — and signals where it sees its policy rate going next based on economic conditions.
The U.S. Federal Reserve and the Bank of England also meet 8 times a year to set benchmark rates.
Here are the monthly CPI release dates for the rest of 2026 — and the first three months of 2027. Full release dates for the following year are announced in December.
See 2025 CPI readings here.
CPI (Consumer Price Index) measures the monthly change in prices from a fixed basket of goods and services paid by Canadian consumers. It's the most widely used measure of inflation.
With tariffs that began in 2025, you're seeing their effect on your grocery bill today, and in goods that are more heavily tariffed, like autos, appliances, and housing supplies. So far, however, the broader impact of tariffs on Canada's inflation rate has been muted by softer growth, weaker labour markets, and government stimulus.
But the recent tariffs announced on both sides of the border could spark a tarifflation resurgence, though the Bank of Canada isn't expecting a significant broad-based impact.
Here's a look at the inflation rate over the past year. Headline inflation is currently above the Bank of Canada's target rate of 2.0%. Inflation peaked at 8.1% in June 2022.
Total CPI (Consumer Price Index) is represented as an annual inflation rate (headline inflation), the measure most frequently reported in the media. It reflects the year-over-year percentage change in the prices of a weighted basket of goods (including volatile items like gas and food).
Core inflation is (usually) the reading most closely monitored by the BoC. We show the average of trim and median, which strips out extreme price volatility to get to the 'core' of price movements.
CPIX excludes the most volatile price components and any effect of indirect tax changes on what's left (hence the X). The BoC stopped using this measure in 2016, though many experts are now turning to it again to gauge the 'bare' impact of price changes.
It depends on which numbers you're looking at, but the Bank of Canada may be seeing the writing on the wall — that inflationary pressure and expectations are getting harder to ignore the longer oil prices stay high and tariffs remain.
Canada's latest CPI (Consumer Price Index) report showed September headline inflation rising to 3.1%, above the Bank of Canada's target, but average core inflation eased to 1.9% from 2.0% in August. Stripping out energy, inflation slowed to 2.1%, suggesting energy inflation hasn't seeped broadly into other components.
However, the BoC's preferred measure, the 3-month annualized average core inflation rate, rose from 2.3% last month to 2.6% this month.
Energy prices remain the main driver of higher headline inflation, with gas up about 28% year over year. Prices for fuel oil and other fuels rose 57.8% over last year, significantly affecting Atlantic Canada consumers.
Even though groceries only rose 1.7% in September, they've risen 33% since September 2020.
The evidence is growing that inflation will continue to rise. According to recent BoC inflation surveys, Canadian businesses plan to pass on higher costs from both higher energy and tariff-related inputs. Both companies and consumers expect inflation to rise and stay higher, with consumers pegging inflation 5 years out at 3.91%, the highest level recorded in these surveys since Q2 of 2022.
Will the BoC raise rates in October, or wait until its December decision?
Canada's October labour market continued to soften, posting another 4.7K job losses when a 13K gain was expected, for a cumulative job decline of about 115K over the past three months and a 0.2% rise in the unemployment rate to 6.7%. In October, the private sector led the job losses, with youth unemployment creeping up again to 13.7%, mostly unchanged from the same month last year.
The labour market has been in excess supply for about 2 years, which is also keeping wage growth contained around 2.2%, suggesting workers aren't in a strong bargaining position. This year has seen labour market ups and downs, and October numbers are not much different from 2025, suggesting trade and higher oil prices continue to weigh on the economy, business hiring, and investment.
A soft labour market could help delay another Bank of Canada rate hike in 2026 — if the next CPI reading isn't alarming. However, signs of entrenching inflation could bring BoC action, despite rising unemployment.
The GDP (Gross Domestic Product) growth for Q3 is looking to come in at a 1.3% annualized pace, much lower compared to Canada's Q2 2026 GDP rebound that registered a 3.3% annualized growth pace, the fastest expansion since 2023.
Real GDP in August and July 2026 came in flat, with September projected to hit below the line at -0.1%.
And fourth-quarter GDP is unlikely to improve. The U.S. trade war escalation is biting into Canada's growth recovery this year, with new U.S. duties to "meaningfully hit in September and take full effect in the fourth quarter" (The Canadian Press, September 29, 2026). That assumes these trade conditions continue and oil prices remain elevated for longer.
Earlier in the year, the Bank of Canada projected 2026 GDP growth of 1.1% (year-over-year). That forecast has changed a couple of times, recently revised downward to +0.7% then back up to 1.0%, as an ongoing energy price shock and new U.S. tariffs and threats play out.
So far in 2026, Canada's economic resilience continues to hold ground overall, with recent government GST relief, additional stimulus for trade-impacted sectors, and infrastructure and trade initiatives helping to keep growth positive in the third quarter (so far).
Amid uncertainty and a potential economic slowdown, inflation risk may still pressure the Bank of Canada to raise rates again in the near term.
| Quarter | GDP Quarterly Change | Annualized Growth (P=Projected) |
|---|---|---|
| Q1 2026 | 0.1% (revised from 0.0%) | 0.3% |
| Q2 2026 | 0.8% | 3.3% |
| Q3 2026 | ~0.3% P | 1.3% P |
| Q4 2026 | ~0.2% P | 0.8% P |
| Year | Projected Real GDP Annual Change |
|---|---|
| 2026 | 1.0% |
| 2027 | 2.0% |
| 2028 | 2.0% |
Sources: Bank of Canada; StatsCan, National Bank, RBC Economics. Note: The quarterly change is the growth rate in real GDP from one quarter to the next. The annualized change is that quarterly rate compounded over a full year.
Canada’s GDP grew a lacklustre 1.6% in 2025, a year shaped by U.S. trade turmoil. Read more: 2025 mortgage year in review
Like it or not, our economies are closely intertwined, so U.S. conditions matter for Canadian rate decisions. Here’s why:
What U.S. factors are on the radar right now?
Bottom line: A hotter U.S. economy, or U.S. Fed rate hikes, tends to push Canadian bond yields and rates up, while a U.S. slowdown can make it easier for the Bank of Canada to hold or cut its benchmark interest rate.
See our great rates here and easily apply online to get your rate quote, or talk to an expert True North broker in your preferred language.
For Alberta - Last Updated Jun 01 2026
4.39%Up to 4.99%
3.74%Up to 5.00%
Canada's economy isn't in a recession, and current projections don’t point to one. Q3 2026 growth is tracking at a 1.3% annualized pace, and Q4 is projected at 0.8%, slower than Q2’s 3.3% but still positive.
Fact: A recession is technically considered an economic contraction reported for at least two financial quarters in a row, but typically a pronounced and persistent period of economic decline.
Consumer demand is holding up despite tariffs and higher energy prices hitting certain sectors, as other sectors benefit from oil and gas revenue and business growth.
Canadian government initiatives are helping to improve domestic productivity, including reducing inter-provincial trade barriers, investing in energy and production infrastructure, reviewing restrictive regulations that hinder growth, and expanding international trade opportunities.
Will it be enough to outdo Trump's latest tariff threats? Only time will tell.
If economic weakness accelerates, the BoC would likely lower its policy rate (assuming job losses and spending pullbacks reduce inflation), providing more budget relief when Canadians may need it most.
Stagflation, an entrenched state of high inflation (or high inflation expectations) coupled with a weak economy and high unemployment, is on everyone's radar. Our inflation pace, while elevated, remains well below the levels typically associated with stagflation and well below 2022's high of over 8%. The unemployment rate also remains below 8%.
That outlook could change if inflation, or market expectations of inflation, runs hotter while the economy continues to weaken.
At True North Mortgage, mortgage activity increased in mid-2026 as the prime rate held steady while rising energy prices pushed fixed mortgage rates higher. Now, in the last few months of the year, with the first prime rate hike in three years arriving in October, rising rates are likely to dampen mortgage and housing activity as the year winds down.
Even so, we expect 2026 to finish stronger than mortgage activity in 2025. We've seen a steady pace of purchases and renewals, with early renewals and renewal switches up 20% and 23% from this time last year, likely reflecting the growing concern about inflation and interest rates amid higher oil prices and ongoing U.S. tariffs.
Read more here: Housing Market Forecast (2026-2030)
Whether rates are falling or rising, your best rate and mortgage can help you afford your home. Many Canadians don't realize they don't have to stick with their bank for a mortgage purchase, renewal, or refinance.
First-time home buyers, especially, can benefit from expert advice that helps set you on the path to successful homeownership amid all these price pressures.
A 5-year variable rate is currently lower than most fixed mortgage rates, and has been the more popular choice over the past few months.
But if prime rate hikes pencilled in over the next year are delivered, that rate gap will narrow, and a fixed-rate choice may gain ground amid the uncertainty — at least until we have a clearer view of where rates are headed in 2027.
For some borrowers, the standard 5-year fixed-rate term may seem too long to wait for markets to settle, so they may opt for a 2- or 3-year term, with the potential to renew into lower rates sooner.
If another prime rate hike comes by year-end, bond markets could calm down and fixed rates could lower again by year-end. If you currently have a variable-rate mortgage and are concerned about your budget next year, that may be the time to switch to a fixed rate (most lenders allow this change mid-term, penalty-free).
If you're buying a home or looking to switch, our unique 6-month fixed Rate Relief™ product can help you bridge the rate-uncertainty gap with budget relief now, giving you time to consider a longer commitment later.
As the CEO of True North, I’m always asked about interest rates, and owning a home is a tremendous source of pride in Canada. That’s why I created True North Mortgage to deliver:
Many of our competitors have tried to copy us ever since.
Have questions about your mortgage or pre-approval? Give us a shout, anywhere you are in Canada. We have your best rate, expert advice and unbeatable service — with over 19,000 5-star reviews from our happy clients.
It's a rough sea for rates, as higher oil prices ripple further than you think.
How to decide between variable-rate FOMO or JOMO? We can help.
Our rates are 0.18% lower on average compared to everyone else. Prove it? Okay!
Want to know where fixed rates are going? Watch bond yields.
