Today, October 28, 2026, the Bank of Canada has announced that it has increased its rate by 25 basis points to 2.5%, breaking a streak of seven consecutive rate holds that it had first established on October 29, 2025.
While many market analysts had predicted rate hikes would commence next year, we were among the first to predict that tightening would begin this fall.
The Bank of Canada has explicitly emphasized that its economic outlook remains subject to considerable uncertainty continuing across multiple sectors. According to the Bank of Canada, this decision had been driven by stronger-than-expected domestic economic growth, which had reached 3.3% in the second quarter and approximately 2% in the third quarter, alongside solid consumer spending and a rebound in business investment. Persistently high oil prices and heightened transportation costs have kept CPI inflation hovering around 3% since April, with projections indicating it will rise to 3½% by year-end. Tightening global financial conditions, which have been characterized by higher advanced economy sovereign bond yields and equity and credit market volatility fueled by uncertainty in the AI sector, also framed this decision, while the Canadian dollar has recovered to around 71 cents. Looking forward, the Governing Council anticipates that new US tariffs will slow fourth-quarter growth before a domestic rebound occurs in 2027, though trade relations remain a major source of forecasting uncertainty. Compounded by an ongoing conflict in the Middle East and rising near-term inflation expectations among households and businesses, the central bank has implemented the rate hike to prevent these persistent supply-side cost pressures from entrenching themselves deeper into the broader Canadian economy.
As we have maintained since April 2025, the Canadian economy would gain significant stability from a robust trade agreement with its largest trading partner, provided the government can overcome its ineffective negotiation efforts.
As this rate decision sinks in over the coming weeks, it will likely stifle market activity that had initially been fueled by unfounded hype, when most Canadians had rallied around the federal government’s “tariff for tariff, dollar for dollar” retaliatory strike against the United States earlier this fall. This shift in public focus, combined with higher interest rates, will likely cool the consumer and business spending that drove early fall optimism. As Canadians prioritize the ongoing trade dispute over standard commerce, this sudden drop in demand will stall momentum across major sectors like real estate and retail.
In Humber Bay Shores, active inventory has increased by 11% from 239 active listings in September to 265 active listings now, signalling softening demand and potential downward pressure on prices in the coming months.
As Canada continues to opt for escalation over certainty, now is the final window to consider selling to capitalize on residual market hype before it completely fades and doom and gloom will again be the media headline.
Perpetual, compounding uncertainty is the new norm.
The best rates that we have seen so far:
3 year fixed at 4.54% (increased from 4.04% in September 2026)
5 year variable at 3.55%
The next scheduled date for announcing the overnight rate target is December 9, 2026.
Read the history of these events here:
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E: LDALINDA@DALINDA.NET • TEL: 416-725-7170
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Palace Place, 1 Palace Pier Court, and Palace Pier, 2045 Lake Shore Boulevard West, in Humber Bay Shores.
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Luke Dalinda, Realtor. Royal LePage Real Estate Services Ltd., Brokerage.
View all current and past Palace Place listings for sale here.