FIRST EDITION
The Bank of Canada's next move
Why the Bank has held seven times in a row, and what could make it move on October 28.
The story so far.
In August 2026 Canadians paid 3 per cent more than a year earlier and lost 42,000 jobs. The Bank of Canada, which aims for 2 per cent inflation, held its rate at 2.25 per cent on September 2, its seventh straight hold. Cutting could feed inflation that is above target mainly because of gasoline, made costly by a Middle East conflict. Raising could cost more jobs while US tariffs, taxes on imports, hit exporters. It decides again on October 28.
A little background
This story covers late August to mid-September 2026, one episode of a longer bind. A Middle East conflict has kept gasoline expensive, and Canadian inflation has sat near 3 per cent since April 2026. The Bank of Canada's target is 2 per cent. In late August 2026 the Canada-US trade conflict flared again, and the United States put tariffs on more Canadian goods. The question this story follows is whether the Bank can bring inflation back to 2 per cent without stalling the recovery. Its tool is the policy rate, which steers what Canadians pay to borrow and so how much they spend. After ten minutes you should know what the Bank is weighing on October 28 and why it has not moved its rate since October 2025. The story runs to that scheduled decision.
Where things stand
As ofThe Bank of Canada, led by Governor Tiff Macklem, is holding its policy rate at 2.25 per cent. Inflation is near 3 per cent, mainly because a Middle East conflict has made gasoline costly. A trade conflict with the United States threatens exporters, and in August 2026 the economy lost 42,000 jobs. The Bank held for a seventh straight decision on September 2 and published its reasoning on September 16. A decision is due October 28, alongside a fresh Monetary Policy Report, the Bank's quarterly forecast.
- Inflation and jobs
- Inflation sits at 3 per cent, but mainly because of gasoline. Excluding it, prices rose 2.4 per cent. Meanwhile jobs fell and wage growth slowed. The Bank says its stance will be guided by its inflation forecast and the risks around it.
- What it already costs households
- Fixed mortgage rates rose without any Bank decision, by the account of the Canadian Real Estate Association's economist. He says markets have already priced in a Bank hike, meaning traders treat one as expected. Rent rose faster in August than in July. Grocery inflation slipped below the overall rate.
- The dates that decide
- The Bank published its deliberations on September 16. It is watching whether energy prices spread to other prices and whether the recovery holds. September jobs data land October 9. The September consumer price index (CPI, the official inflation measure) follows on October 19. The decision and the new forecast come on October 28.