As of October 2026 the Bank of Canada policy rate has sat unchanged for close to a year, and my reading of Governor Tiff Macklem's recent remarks on inflation is that the stable period may be ending. He promised nothing. The tone, in my view, makes an increase at the October 28 or December 9 decision more plausible than it was.
I am Moe Asgarian, a real estate broker in Toronto and the head of Team Asgarian. I am not speaking for the Bank, and I may be reading Macklem wrong. But if you hold a mortgage or you are thinking about buying, this is the kind of speech to take seriously rather than wait out.
What the Governor's Tone Suggested in October 2026
We know the policy rate has not moved for close to a year as of October 2026, and a long stretch of stability teaches everyone to assume more of it. My own reading of the Governor's recent comments on inflation and the Bank's coming decisions is that he is preparing the market for an increase, although nobody can say that with certainty yet.
No central banker wants to be late in recognizing that inflation is rising again. If the Bank reacts too late, it may be forced to raise rates much harder afterwards, the way it did in the past few years. I think Macklem wants to move before reaching that point. The two meetings that matter are October 28 and December 9, and I do not know which one of them, if either, carries a change.
Why Energy and Food Costs Keep the Pressure On
One of the reasons I am uneasy is renewed pressure from energy prices on inflation. The price of oil has come off its peak, but as of October 2026 fuel is still expensive for a lot of businesses. Diesel matters enormously to transport, to farming and to the food supply chain.
When the cost of moving freight rises, part of that cost gets passed into the price of goods. When producing and moving food costs more, bringing inflation down becomes harder. These pressures do not look like something that disappears completely within a few weeks, which is why I think the Bank is getting itself ready for a harder decision.
The Balance the Bank of Canada Has to Strike
Raising rates is not free for the Canadian economy. As of October 2026 plenty of households are already struggling with high living costs and loan payments, and plenty of buyers are waiting to see which way mortgage conditions go. The economy is still dealing with the consequences of trade tension and weakness in some sectors. The Bank has to balance controlling inflation against not pressing too hard on the economy.
My read is that Macklem would probably prefer limited and gradual increases. To be clear, that does not mean the policy rate is heading back up to 5 percent the way it did in the previous cycle. The scenario I consider likely is several smaller increases with pauses between decisions. How many, and when, is still not clear.
What a Higher Policy Rate Does to Variable and Fixed Mortgages
For the housing market the most important question is what these conditions do to fixed and variable mortgages. If the Bank's policy rate goes up, the cost of variable mortgages is usually affected. In the example I work with, a variable rate starts at about 3.35 percent. If it rises a full percentage point in total, it reaches roughly 4.35 percent, which is close to some of the five-year fixed rates visible in October 2026. The rate actually offered on any mortgage depends on the applicant's finances and the contract.
Fixed rates move as well. In the few weeks before October 2026 the fixed rates at many of the main banks went up. So I give two pieces of advice. First, anyone taking a fixed mortgage now should also examine the early exit terms and the penalty that may come with them. Second, anyone taking a variable should be able to carry a higher payment than the one they begin with.
In my view a variable mortgage can still be the better option for one group of buyers, and I am saying that as of October 2026, with the warning that conditions could change quickly. The logic is that after a possible increase, a variable rate also has room to come down later, though there is no guarantee of when that happens. The choice between fixed and variable has to match each family's budget and tolerance for risk.
What to Do Before the October 28 and December 9 Decisions
The main message I take from the speech is that you should not assume the current stability of interest rates is permanent. If your renewal date is close, calculate several monthly payment scenarios now instead of waiting. If you plan to buy, do not measure your buying power only against the rate you are quoted in October 2026.
The Bank's next decision has not been announced. Being ready for a change in the rate is what helps buyers and homeowners, and preparing early costs you nothing at all.
If you want to test your renewal or your purchase against a higher rate before the next decision, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.
Frequently asked questions
When is the Bank of Canada's next interest rate decision?
The two decision meetings after this was written in October 2026 are October 28 and December 9. As of October 2026 the Bank had not announced whether either meeting would bring a change, and the policy rate had already been flat for close to a year.
Should I take a fixed or a variable mortgage?
It has to fit your budget and your tolerance for risk. As of October 2026 I still think a variable can be the better option for one group of buyers, because a variable rate can come back down later after an increase, with no guarantee of when. If you take a fixed, check the early exit terms and the penalty in the contract. If you take a variable, make sure you can carry a payment higher than the one you start with.
How much could a variable mortgage payment rise if the Bank of Canada raises rates?
In the example used here, a variable rate starting around 3.35 percent in October 2026 would sit near 4.35 percent after a full percentage point of increases. The rate any individual borrower is quoted depends on their financial situation and their contract, so the useful test is whether you could still afford the payment one point higher.