Why the Bank of Canada May Hold Rates on October 28th

The upcoming decision from the Bank of Canada (BoC) on October 28th can be described as almost a coin-flip on a possible rate hike. Since September's inflation numbers came out, markets have leaned further toward a hike. With the Consumer Price Index rising 3.1% year over year in September, many believe inflation gives the BoC a reason to drive interest rates up. After all, the Bank’s job is to bring inflation back down to its 2% target.

However, there could be an argument based on certain data points in the Canadian economy. A soft GDP, a weak jobs report, and rising consumer insolvencies: these all give the Bank strong reasons to hold.

No one should predict with 100% confidence that the BoC will hold because of this data, but the decision will be a lot closer than many markets and analysts may think. A rate hike is not necessarily guaranteed on the 28th.

GDP and Job Growth

In July, the Bank released a Monetary Policy Report (MPR) alongside a rate hold announcement. It projected just 0.7% annual GDP growth for 2026, down from the 1.2% it forecast in April, which also came with a rate hold.

Then in October, Statistics Canada released its report on the labour force and job growth in the country. They found that Canada had lost 68,000 jobs in September. According to The Canadian Press, this erased all of the previous employment gains in 2026. This was devastating to Canada’s job market. The unemployment rate shifted to 6.5% as a result of these losses.

Both of these factors in the Canadian economy could influence the Bank’s decision at the end of October.

Consumer Insolvencies

Canadians filed 37,523 consumer insolvencies in Q2 of 2026, up 6.9% in a year-over-year comparison. This is the highest quarterly volume of insolvencies since 2009, per the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). This data could also influence the BoC’s upcoming decision on the 28th.

Trade Risk:

With the ongoing economic pressure from tariffs applied by the American government, BoC Governor Tiff Macklem said in September that, if they remain in place, the latest tariffs could roughly halve Q4 growth to below 1%. Hiking into a potential tariff shock limits the Bank’s room to manoeuvre with the rates.

Economists at Canada’s big banks are split. RBC has pencilled in an October hike, but says it has very low conviction in it, while Desjardins now expects the Bank to raise rates on the 28th.

The Other Side of the Story:

The Consumer Price Index (CPI) was 3% year over year this August, being a full point above the target number. The report on the September CPI came out on October 19th and showed inflation rising to 3.1%. This could shift the picture that the Bank is working with. Perhaps it could motivate them to increase the rate, as markets are predicting. As mentioned before, no one should have 100% confidence when predicting the decisions the Bank will make at the end of October.

What a Hold or a Hike Means for Your Mortgage

If the Bank holds on October 28th, the prime rate should stay where it is, and the variable-rate payments should not change. If the Bank raises its rate by a quarter point, lenders would likely raise their prime rate by the same amount, and variable-rate borrowers would pay more interest. Fixed-rate borrowers would not see a change until renewal, but anyone renewing or buying soon could face higher fixed rates if bond yields keep rising. A mortgage broker can help you compare your options before a decision.