Will The Bank Of Canada Raise Rates Again In December?

Nobody outside the Bank of Canada knows whether it will raise rates on December 9, 2026. On October 28 it lifted the overnight rate to 2.50% and said a further increase may be needed, while proceeding carefully. BMO expects another hike in January 2027. Desjardins and CIBC each expect one more. This page sets out those statements and what a quarter point would do to a mortgage.

What The Bank Said On October 28

The press release raised the target for the overnight rate by 25 basis points, to 2.50%. The Bank Rate is 2.75% and the deposit rate 2.45%. It was the first increase since July 2023. The Bank said inflation had been higher and more persistent than in its July projection and that it raised the rate to reduce the risk of energy prices spreading into other prices.

The two phrases that matter for December are short. The Bank said a further increase may be needed. It also said it will proceed carefully. Together they leave December open: neither a promise to move nor a promise to pause. The wording is covered in the October 28 guide.

The Inflation Path

The Bank reports consumer price inflation at about 3% since April, with about 3.5% expected by year end. Its projection has an average around 3% in 2027 and a return to about 2% by mid-2028. Excluding gasoline, September inflation was 2.2%, so the gap between headline and underlying inflation is one of the things readers can watch. The Bank also expects growth to slow in the fourth quarter because of US tariffs, before picking up in 2027.

What Banks Expect After The Hike

Look at what is in the table. BMO names January, not December. Desjardins gives no date. CIBC gives a ceiling. None of the three names December 9. They are the banks' words, not this site's. The wider set of calls, including the pre-hike end-2027 numbers from September, is on the forecast page.

What A Quarter Point Would Do To A Variable Payment

Banks have moved prime the same day as the Bank of Canada, effective the next day. If prime followed a December move by 0.25, a variable at prime minus 0.90 would go from 3.80% to 4.05%. Using $500,000 amortized over 25 years:

That is $67.50 a month on an adjustable-payment contract, or $810 a year, on that balance. A fixed-payment variable contract keeps the payment and lets more of it go to interest, which lengthens the amortization instead. Which one you hold is a contract term. For the full set of balances, see what prime at 4.70% does to a variable payment.

The Fixed Versus Variable Gap At Each Step

A quarter point also changes the comparison between fixed and variable. Take 4.54%, the rate on a BMO 3-year fixed renewal letter and on a B2B 5-year fixed broker quote, as an illustrative fixed rate and set it against the variable on the same $500,000 over 25 years. The fixed payment is $2,778.49.

Each quarter point takes about $67 off the gap. The fixed rate in this table is the one fixed number and the variable is the moving one, which is the whole reason the December date matters more to variable borrowers. See fixed or variable after a rate hike for the rest of the comparison.

What A Hike Would Not Do To A Fixed Mortgage

It would not change a closed fixed rate already in force. It would not change a fixed offer being held in writing until the hold expires. It would not automatically change new fixed pricing either, because lenders price from bond yields. The 5-year yield was 3.57% on October 27, down from 3.69% on September 29, while the Bank was preparing to raise. A move that markets had expected can leave fixed rates almost unchanged. A move that surprises can shift them in either direction.

That is the reason fixed rates rose before the October hike and not on the day. The yield history is in why fixed rates rose before the hike.

What The Board Shows Just Before December

Borrowers posted 3-year fixed offers at 4.44% from RBC and BMO around October 28, while a TD renewal letter on the same date was 4.89%. Variable offers on the board ran mostly from about 3.35% to 3.85%, largely quoted at the old 4.45% prime, so each is 0.25 higher once prime is 4.70% and the discount holds. Check the dates on the rate board before comparing.

The 0.45-point spread between that TD letter and the 4.44% offers is larger than a single quarter-point hike. A borrower with a renewal date inside the window may care more about that gap than about December. That is something to price, not predict.

A pause would be simple to read. Prime would stay at 4.70%, the variable at prime minus 0.90 would stay at 3.80%, and the payment on the $500,000 example would stay at $2,576.17. The next dates after December 9 would then be January 27, 2027 with a Monetary Policy Report, and March 3. BMO has named January as its date, so even a December pause would not close the question for the banks quoted above.

How To Handle A Decision Nobody Can Call

There are two honest approaches. One is to watch the data: the next inflation release, the Bank's language, bond yields in early December. The other is to remove the question for a while. A rate hold of 90 to 120 days, where available, means a December 9 decision does not change the offer in hand. Lenders differ on whether the held rate or the lower market rate applies if rates fall, and that is a thing to ask before the hold starts.

A licensed mortgage broker can compare holds across lenders. Request cheaper rates and ask for a variable priced against the new 4.70% prime alongside a 5-year fixed, each with the hold length stated. If a renewal is due in the next 120 days, the renewal timing guide shows how the windows fit. The scheduled dates beyond December are listed at Bank of Canada rate announcement dates.

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