The Bank of Canada decides in four hours. The market says hike — the economy says wait.

The decision, and why this one matters

The Bank of Canada announces its policy-rate decision at 9:45 a.m. ET on Wednesday, Oct. 28, alongside its quarterly Monetary Policy Report, with Governor Tiff Macklem holding a press conference afterwards. The policy rate has stood at 2.25% since a cut in October 2025, with seven straight holds since — and the Bank has not raised rates since July 2023.

This is the first decision in a year where the outcome is genuinely in doubt, and the stakes run straight to household budgets: a 25-basis-point move typically flows through to variable mortgage rates and the prime rate, currently 4.45%, within a billing cycle.

The flip — from hold to hike in ten days

The market's base case flipped fast. In the Reuters poll conducted Oct. 21–23, 19 of 34 economists (56%) expected a 25-basis-point hike to 2.50% on Oct. 28, with another rise by end-March — a reversal from the previous Reuters poll, in which 80% expected the Bank to stay on hold through the end of 2026.

Market pricing tells the same story, dated: CORRA-based overnight-index-swap pricing put the odds of a hike at about 78% as of Oct. 23, according to BlueGamma, and Bloomberg data reported by Canadian Mortgage Professional put it near 75% on Oct. 26. The Globe and Mail reported overnight swaps implying a 75% chance, while other Bloomberg reads put it as high as 87% — the range itself is a reminder that these are market bets, not the Bank's decision.

What flipped it, according to Reuters reporting, was September inflation plus Governor Macklem's warning in Bangkok on Oct. 17 that the Bank expects to raise its inflation forecast significantly, asking whether inflation would come back to target on its own or whether the Bank would have to raise rates to influence the path.

The case for a hike

Headline inflation rose to 3.1% in September, according to Statistics Canada, above the Bank's 1–3% target range, though below the 3.2% Reuters consensus. Energy drove it: gasoline was up 27.8% year over year and fuel oil 57.8%, with energy overall up 19.0%.

The Bank's own third-quarter surveys, released Oct. 19, added to the worry: consumer expectations for inflation five years out hit 3.91%, the highest since 2022, and firms said they planned to pass tariff costs through to customers. Desjardins, RBC Economics and CIBC now expect a hike, with Desjardins' Royce Mendes telling Reuters the survey responses suggested more serious inflationary pressures were coming.

The case for a hold

The hold case is not a fringe view — it is the other half of a genuinely two-sided decision. Core inflation cooled: CPI-trim was 1.8% and CPI-median 1.9% in September, both down from August, and inflation excluding gasoline was 2.2%, down from 2.4%.

The labour market is soft: the economy lost 68,300 jobs in September and unemployment sits at 6.5%, according to Statistics Canada. TD and BMO still expect a hold, and Rabobank strategists Christian Lawrence and Molly Schwartz expect a hold at 2.25% through the next 12 months despite markets pricing an 85% chance of a hike, citing mixed labour data and inflation concentrated in shelter and energy, according to FXStreet's Oct. 26 report of their view. Rabobank's own risk skew is toward a hike at this meeting — a hold call with the risk flagged, not a dovish pivot.

What it means for borrowers

As an illustration only, not financial advice: a 25-basis-point rise adds roughly $41 a month on a $300,000 mortgage, $68 on $500,000 and $103 on $750,000, on a prime-minus-0.40% variable rate over 25 years. Fixed rates have already priced in much of the expected tightening path, so the bigger swing for fixed borrowers comes from how the statement and forecasts shift December expectations.

What to watch at 9:45

Watch three things: the decision itself; the new Monetary Policy Report forecasts, which Macklem has already flagged will be raised significantly; and his press-conference language on whether a hike today, if it comes, is the start of a path or a one-off insurance move. The U.S. Federal Reserve decides at 2 p.m. ET the same day, and August GDP lands Friday, Oct. 30, with the Bank's final decision of 2026 on Dec. 9.