Tiff Macklem Changes His Tone: The Bank of Canada Opens the Door to a Rate Hike
Context, numbers, and the concrete impact for Quebec borrowers (October 2026)
What changed this week
The Bank of Canada held its policy rate at 2.25% for a seventh straight time. But this week, the tone changed. Speaking from Bangkok, Governor Tiff Macklem warned that surging energy prices are pushing inflation toward 3% — well above the July forecast — and that a hike is no longer off the table.
It would be the first increase since July 2023 — a genuine change of course after two years of cuts and then pauses. Next decision: October 28.
What happened
“We haven't raised our rates yet. We watched the energy increase go by, but the longer it lasts, the harder it gets.”
Those are Macklem's words — and he even raised the possibility of consecutive hikes if inflation settles in. The Middle East conflict, reduced shipments, and refinery damage are driving oil prices up, and that shock feeds directly into inflation.
The context in numbers
Three reference points to understand where we stand:
Rate trajectory
Peaked at 5%, then fell to 2.25% between 2024 and October 2025, stable ever since (7 holds). A hike would reverse a cutting cycle that had lasted two years.
Inflation
CPI at 3.0% in August 2026 (second month in a row), against a 2% target. Core measures are lower (CPI-trim 1.9%, CPI-median 2.0%). September data comes out October 19, a few days before the decision, and could climb toward 3.2%.
Markets
About a 3-in-4 chance of a hold on October 28, but nearly 1% (100 basis points) of hikes priced in over the coming year.
What this changes for you
The impact depends on your situation. Four scenarios:
Variable rate
A hike translates directly into a higher payment. As a rough guide, on a $500,000 variable mortgage, each 0.25% adds about $70/month; the ~1% expected over a year is nearly $290/month more.
Upcoming purchase
A pre-approval locks a rate for 90 to 120 days. When the next move could be upward, that lock has real value.
Renewal
Term maturing in the next few months? Shop early rather than wait.
First purchase
Programs (HBP, FHSA, credits) don't move with rates; combining them stays advantageous no matter which way the Bank goes.
What to do now
Nothing is decided, and no one should decide out of fear. But a good plan is built before the announcements, not after. The most useful thing: knowing your precise situation — current payment, room to maneuver, options if rates rise. That's what we look at together in a few minutes.
A good plan is built before the announcements, not after. The October 28 decision is coming fast.
Anthony King's Recommendation
After following the Bank's shift in tone and the inflation numbers, here are my findings:
- The cutting cycle is over; the risk now leans upward, not downward. Planning around a quick drop would be unwise.
- If you're on a variable rate or near renewal, the time to look at your options is before October 28 — not after.
- There's no reason to panic: a hike isn't certain (3-in-4 odds of a hold on the 28th). The goal is to have a plan ready for either scenario.
Anthony King, AMF-certified mortgage broker #254937
Let's take stock before October 28
Variable rate, renewal approaching, or a purchase in view? Write or call me — we'll look at your situation together.