Key Takeaways
- The Bank of Canada will announce its next interest-rate decision on October 28, 2026.
- Canada's annual inflation rate reached 3.1% in September, with gasoline prices rising 27.8% year over year.
- Higher business costs could sustain inflationary pressure, but a rate hike remains unconfirmed.
Bank of Canada Faces a Critical Rate Decision
Canadians will learn on Wednesday, October 28, whether the Bank of Canada changes its benchmark interest rate as policymakers weigh persistent inflation against economic uncertainty.
The central bank last held its policy rate at 2.25% on September 2. Although a further hold had been widely anticipated, rising energy prices and renewed trade tensions have complicated the inflation outlook ahead of this week's announcement.
Why Inflation Is Back in Focus
Statistics Canada's September Consumer Price Index report, released October 19, showed annual inflation rising to 3.1%, compared with 3.0% in August. Gasoline prices climbed 27.8% year over year, making energy costs a major contributor to the increase.
However, the picture is not uniform. Consumer prices excluding gasoline rose 2.2% annually, down from 2.4% in August. This distinction matters because policymakers must assess whether higher fuel costs are spreading into the broader economy or remaining concentrated in particular categories.
Businesses Warn of Higher Costs
The Bank of Canada's third-quarter Business Outlook Survey, published October 19, found that firms' expectations for input costs and selling prices had eased but remained elevated.
Roughly half of surveyed businesses said they planned to pass some or all of their increased costs linked to the Middle East conflict and tariffs on to customers. Firms also reported that renewed Canada-US trade tensions were weighing on business sentiment and investment plans.
If higher energy and import costs continue feeding into prices, inflation could remain difficult to bring sustainably back to the Bank's 2% target. However, weaker demand and economic uncertainty could also argue for caution.
What Borrowers Should Watch
The Bank's next policy announcement is scheduled for 9:45 a.m. Eastern Time on October 28, alongside its Monetary Policy Report. A press conference is scheduled for approximately 10:30 a.m. Eastern Time.
TwikUp's Perspective
The decision matters well beyond financial markets. Mortgage borrowers, households carrying variable-rate debt and businesses financing new investments may all be affected by changes in borrowing costs.
Yet one inflation report does not determine the outcome. The Bank must weigh energy-driven price increases against underlying inflation, economic growth and the risk that tighter policy could weaken demand. Canadians should distinguish economists' forecasts from the official decision, which remains unknown until the announcement.