The Bank of Canada Plot Twist: A Rate Hike Is Now on the Table for October 28

Two weeks ago, the story was simple: the Bank of Canada would hold its policy rate at 2.25% on October 28, extending a freeze that has lasted all year. That was the premise of my last post on this decision. Then, in the space of a few days, the consensus flipped — and if you are buying, selling, or renewing a mortgage, the flip matters more than the original forecast.

What changed. Three things moved at once. First, inflation: September’s reading came in at 3.1%, just above the Bank’s 1–3% target range — not a blowout, but the wrong direction after months of calm. Second, the Bank’s own business outlook survey showed inflation expectations jumping sharply, in the run-up to a breakdown in trade talks with the United States. Third, Governor Tiff Macklem’s weekend remarks were read by markets as a deliberate hint that a hike is coming. Interest-rate futures went from pricing a roughly 30% chance of an October hike to around 75% in days.

The numbers now. A Reuters poll of 34 economists conducted October 21–23 found 19 of them — 56% — expecting a 25-basis-point hike to 2.50% on October 28, the Bank’s first move in a year, with another quarter-point rise by the end of March. Oxford Economics has gone further, forecasting hikes in both October and December, taking the rate to 2.75%. But this is not unanimous: the C.D. Howe Institute’s Monetary Policy Council, a shadow council including the chief economists of Canada’s six largest banks, voted 6-to-1 on October 22 to hold at 2.25% next week. When the professionals disagree this openly, the honest answer is that Wednesday is genuinely live — not a done deal either way.

What a hike would mean for buyers. A quarter-point rise in the policy rate lifts prime — currently 4.45% — and with it, variable mortgage rates and lines of credit. On a $700,000 variable mortgage, 25 basis points works out to roughly $90 a month. That is not a deal-breaker on its own, but it lands in a market where buyers already have the upper hand: 1,717 sales in September, down 8.4% year-over-year, with 16,394 listings sitting 24.3% above the seasonal average. Higher borrowing costs will not suddenly create bidding wars — but they do argue for getting a rate hold in place before Wednesday if you are actively shopping, and for re-running your numbers rather than assuming last month’s math still holds.

What it would mean for sellers. Oxford Economics is blunt: higher bond yields and borrowing costs could deepen the housing slowdown, with sales and prices declining through the fall and into early 2027. In a market where the composite benchmark is already $1,075,900, down 5.5% year-over-year, a hike strengthens the case I made two weeks ago — pricing strategy is everything. Well-priced homes still move; aspirational pricing in a rising-rate environment is how listings go stale.

What it would mean if you are renewing. If your mortgage renews in the next few months, this week is worth a phone call to your lender or broker. A hike does not automatically make fixed the right choice — fixed rates follow bond yields, not the policy rate directly, and they have already moved up on the same news — but it does change the trade-off. The worst outcome is renewing on autopilot without comparing what variable and fixed actually cost you after Wednesday’s announcement.

The bottom line. The Bank announces Wednesday, October 28, and I will post a short reaction once the decision is out — what actually happened, and what it changes. Until then, the practical moves are the same whether it hikes or holds: buyers, lock a rate hold; sellers, price to this market, not last year’s; renewers, get a comparison before you sign. The plot twist is a reminder that in this market, the forecast is not the plan — the plan is being ready for either outcome.

Buying, selling, or renewing before year-end? Get in touch for a no-pressure read on what your situation looks like after Wednesday’s decision: info@jeffreyqian.com | (778) 238-2014.