Bank of Canada raises policy rate 25 basis points to 2.5% and says more increases may be needed
Published · Updated
What happened
The Bank of Canada increased the target for the overnight rate by 25 basis points to 2.5% on October 28. The Bank's announcement also said it remains prepared to raise the policy rate further if needed.
Why it matters
A policy rate increase changes borrowing costs across mortgages, consumer credit, commercial lending and sovereign financing benchmarks. The Bank's indication that additional increases remain possible keeps markets focused on a higher near-term rate path and on the sensitivity of credit performance and funding costs.
The Bank of Canada on October 28 raised its policy rate by 25 basis points to 2.5%. In its statement, the Bank also said further increases may still be required, keeping a tightening bias in place after the move. The announcement resets near-term assumptions for household borrowing, business credit, bank funding and federal-provincial debt issuance costs.
Watch for
Bank of Canada publication of updated market operations or balance-sheet guidance by 2026-10-31 Government of Canada bond auction results and bid-to-cover data released by the Bank of Canada by 2026-10-31 OSFI acknowledgement of any supervisory guidance on household credit or lender risk management by 2026-11-01 Major Canadian bank public changes to prime lending rates posted by 2026-10-30
Sources
- Policy interest rate · bankofcanada.ca
- Bank of Canada raises the policy rate by 25 basis points to 2½% · bankofcanada.ca
- Monetary Policy Report—October 2026 · bankofcanada.ca
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