Bank of Canada raises rate to 2.5% amid energy-price risks
The central bank increased its policy rate by 25 basis points on October 28.
The Bank of Canada raised its overnight policy target by 25 basis points to 2.5% on October 28, 2026. The Bank Rate became 2.75%, while the deposit rate became 2.45%. Its announcement and accompanying material linked the decision to persistent energy costs and the risk that these pressures spread to other goods and services.
Economic context
Energy matters beyond the price paid at a filling station. Businesses use it in transport, production and storage. They can absorb higher costs in profit margins or pass some costs to customers. The speed and breadth of that transmission are separate questions from the original energy shock.
For borrowers, a change in the policy rate does not mean every loan immediately reprices by the same amount. Fixed or variable terms, renewal dates and lenders’ pricing decisions all matter. The announcement alone also cannot establish the Canadian dollar’s direction, because exchange rates reflect relative yields, trade conditions and policy expectations elsewhere.
The bank identified December 9, 2026 as its next scheduled decision date. Until then, incoming inflation and activity data remain relevant to assessing the outlook. An expected rate path is not an official commitment. This report explains the dated decision and its context without making a trading recommendation or currency-price prediction.