Bank of Canada Faces Rate Decision as Jobs Drop, Inflation Lingers
The Bank of Canada meets October 28 with markets pricing in a likely hold but growing calls for a rate cut after September saw Canada lose 68,300 jobs while inflation held at 3%, above the 2% target.
Canada's central bank faces a policy dilemma on October 28 when it announces its next interest rate decision: inflation remains stubbornly above target, but the job market has weakened sharply. The Bank of Canada October 2026 rate decision now leans toward a 25-basis-point cut after 68,000 jobs were lost in September 2026, pushing the unemployment rate to 6.5 per cent.
The Bank of Canada's overnight target rate stands at 2.25%, held for the 7th consecutive meeting on September 2, 2026. That means mortgage rates and savings account yields have been frozen in place for nearly a year—but the ground beneath that stability is shifting.
The Inflation Problem
Canada's inflation rate was 3.0% year-over-year in August 2026, unchanged from July, with CPI excluding gasoline rising 2.4%. This remains 50% above the Bank's 2% target, driven largely by energy costs tied to Middle East supply disruptions. Gasoline remained the largest contributor even as its pace eased, rising 23% year over year from 26% in July, with prices staying elevated as the Middle East conflict carried into September.
What Markets Expect
Market pricing suggests the October 28 decision is wide open. The Bank of Canada is expected to hold at 2.25% on October 28, with markets pricing in about 1-in-4 odds of a hike. However, fresh data arriving October 19—Statistics Canada's September CPI print—could shift those odds dramatically. The next CPI release, covering September, arrives on October 19, 2026, 9 days before the Bank of Canada's October 28 decision.
What This Means for Your Finances
If you hold a variable-rate mortgage or line of credit, October 28 is the date to watch. A rate cut would lower your borrowing costs immediately; a hold keeps the status quo. For savers and those planning to renew mortgages in the next 12 months, the trajectory matters: economists increasingly expect rate cuts to resume in 2026–2027 if job losses persist, which could reshape borrowing costs for the rest of your time in Canada. If you're planning a major purchase or renovation, locking in a rate before the decision or after clarity emerges on the October 19 inflation number could save you hundreds of dollars per month.
Sources
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