Bank of Canada raises policy rate to 2.5% as inflation pressures persist
The Bank of Canada raised its policy interest rate by 0.25 percentage points to 2.5% on October 28, its first increase since July 2023. Governor Tiff Macklem said persistent energy-price increases and a more resilient economy warranted action to prevent higher costs from spreading into broader inflation.
The Bank expects inflation to reach approximately 3.5% by year-end, remain at or above 3% through much of 2027, and return close to its 2% target by mid-2028. Economic growth is forecast at 1% in 2026 and approximately 2% in both 2027 and 2028.
Macklem warned that gasoline, diesel and heating oil prices are expected to remain elevated. Businesses are also expected to pass more of their increased costs through to customers. Further rate increases remain possible, with decisions made one meeting at a time.
For Nova Scotia rental housing providers, the outlook points to continued pressure on financing and operating budgets, particularly for buildings heated with oil. Higher borrowing costs could also make renovations and new rental projects more difficult to finance.
Renters already carrying substantial debt may face additional financial strain. Where borrowing rates rise on variable-rate loans or lines of credit, higher debt-servicing costs would leave less income for rent, heating and other essentials. Combined with elevated living costs, this could increase the risk of rent arrears for households already struggling to meet their obligations.
Rental housing providers should monitor missed or late rent payments and unexpected changes in payment patterns, reaching out early to identify financial difficulties and discuss available support before arrears accumulate.
Source: Bank of Canada — Governor Tiff Macklem, October 28, 2026
Read the Governor’s opening statement
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