Add StudioX as a preferred source on GoogleThe Bank of Canada rate hike announced Wednesday will raise borrowing costs for many families in Surrey and across B.C. The Bank lifted its key interest rate by a quarter of a percentage point, to 2.5 per cent from 2.25 per cent. It is the first increase since July 2023, and it ends a year without a move.
Governor Tiff Macklem also warned it may not be the last. “There could be a need to increase the policy rate further, but given uncertainties, we will proceed carefully,” he said.
Why the Bank of Canada rate hike happened now
The Bank said inflation has turned out higher and more persistent than it expected in July. Its main worry is that high energy prices will spread into the prices of other goods and services. Businesses have absorbed higher costs so far, but the Bank says surveys suggest more of those costs will be passed on to customers over the next year.
Canada’s annual inflation rate was 3.1 per cent in September, up from 3.0 per cent in August and just above the Bank’s 1 to 3 per cent target range. Energy prices were up 19 per cent from a year earlier, and gasoline was up almost 28 per cent. Without gasoline, inflation was 2.2 per cent.
What the Bank expects next
- Inflation: about 3.5 per cent by the end of 2026, an average of 3 per cent in 2027, and back to the 2 per cent target by the middle of 2028.
- Growth: 1 per cent this year, slowing in the last three months of 2026 because of new U.S. tariffs, then about 2 per cent in both 2027 and 2028.
The Bank said it is weighing uncertainty over the Middle East, Canada–U.S. trade relations and how far energy costs will flow through to consumer prices. Macklem said the Bank “would take future decisions one meeting at a time.” The next scheduled decision is on Wednesday, Dec. 9.
What it means for your mortgage and loans
After the Bank of Canada rate hike, variable-rate mortgages and lines of credit move with your lender’s prime rate, and prime rates are expected to rise by the same quarter point. As a rough guide, each extra quarter point adds about $1,250 a year in interest, or about $104 a month, for every $500,000 of variable-rate debt. Ratehub expects the lowest five-year variable mortgage rate on the market to rise from 3.45 per cent to 3.70 per cent.
Fixed-rate mortgages do not change today. The Bank of Canada rate hike matters when you renew or take out a new mortgage. Fixed rates follow bond yields, which had already been rising before this decision. Ratehub lists the best five-year fixed rate at 4.34 per cent.
Renewing soon? Get written quotes from more than one lender, including credit unions. Ask about prepayment options and penalties before you sign, and do not wait until the last week.
Savers should see returns on high-interest savings accounts and GICs edge up. Banks do not all move at the same pace, so compare before you lock in.
Home buyers will find borrowing more expensive, which could slow an already soft housing market in Metro Vancouver.
For newcomer families and small businesses
If you are new to Canada, this is a good time to check your loans. Your mortgage or loan statement shows whether your rate is fixed or variable, and when your term ends. Car loans and credit card balances matter too: variable-rate debt costs more from today. If you are unsure, ask your lender directly. Many banks and credit unions in Surrey can explain your options in Punjabi, Hindi or Urdu.
Small business owners feel the Bank of Canada rate hike too. Those with variable-rate lines of credit or equipment loans should expect higher monthly interest. Review your cash flow for the next six months, and talk to your accountant before taking on new debt.
A tough balance for the Bank
The Bank of Canada rate hike puts the Bank between two pressures. Prices are rising, led by energy. At the same time, the job market is weak and the trade dispute with the United States is weighing on growth. Raising rates too far could slow the economy further. Waiting too long could let inflation take hold.
The Bank’s full forecasts are in its quarterly Monetary Policy Report, released Wednesday at bankofcanada.ca. For more on what B.C.’s new government plans for the provincial budget, read our report on Lorne Doerkson’s transition and first-day financial review.
Harnaik Singh Rathor is the Founder, Publisher, and Editor-in-Chief of StudioX News Canada, Canada's multilingual digital news network serving multilingual diaspora communities across Canada. With a background in media production, public relations, and multicultural communications, he founded StudioX Film and TV Corporation to bridge the gap between mainstream Canadian media and the country's diverse immigrant communities. He is a member of the Canadian Association of Journalists (CAJ), RTDNA Canada, CPRS Vancouver, NEPMCC, and the Canadian Freelance Union (Unifor). Based in Surrey, British Columbia. | LinkedIn: https://www.linkedin.com/in/harnaiksinghrathor/ | Muck Rack: https://muckrack.com/harnaiksinghrathor | Email: editor@studioxnews.ca
