Bank of Canada Governor Says More Rate Hikes May Be Needed
Bank of Canada Governor Tiff Macklem said on November 3, 2026 that further interest rate hikes may be needed in Canada, but he also said the bank will proceed carefully and decide one meeting at a time. That means another hike is possible, not promised.
What happened
Macklem spoke to the House of Commons finance committee in Ottawa, just days after the Bank of Canada raised its policy rate to 2.50 percent on October 28, 2026. That was the bank’s first rate hike since July 2023. Dow Jones reported his remarks, and Reuters also reported that Macklem said government fiscal policy is not currently making the fight against inflation harder.
The reason for the cautious warning is energy. Macklem pointed to the war in the Middle East keeping oil prices higher for longer. Higher oil prices raise fuel costs at the pump and raise costs for many businesses. The bank expects those higher costs to pass through to prices more over the coming year.
In the bank’s updated outlook, inflation in Canada is expected to rise to about 3.5 percent by the end of 2026, stay at or above 3 percent through much of 2027, and return to near 2 percent by mid 2028. The bank’s target is 2 percent. Growth is expected to slow in the final quarter of 2026 because of new United States tariffs, then recover to about 2 percent in 2027 and 2028, after growth of about 1 percent in 2026. The next Bank of Canada rate decision is on December 9, 2026.
For background on the October hike, see our earlier post on the Bank of Canada raising rates to 2.50 percent in its first hike since 2023.
Why it matters for beginners
A central bank rate is the starting point for many borrowing costs in an economy. When it rises, loans and mortgages can become more expensive over time. When it falls, borrowing can become cheaper. Central banks raise rates to slow spending and cool inflation, which is the general rise in prices.
Macklem’s message has two parts that beginners should hold together. First, inflation is still above target, so the bank is not ruling out more hikes. Second, the bank is worried about uncertainty, so it does not want to move too fast or promise a fixed path. That careful tone matters because a hike that is too large or too fast can slow the economy more than intended.
What to watch next
Watch the Bank of Canada’s next decision on December 9, 2026, and watch Canada’s next inflation and jobs reports before then. Also watch oil prices, since Macklem linked the inflation outlook directly to energy costs staying higher for longer. If oil prices fall back, the case for another hike weakens. If they stay high, the case strengthens.
FAQ
What is the Bank of Canada policy rate now?
It is 2.50 percent, after the October 28, 2026 hike from 2.25 percent.
Did Macklem promise another hike?
No. He said further hikes may be needed, but decisions will be taken meeting by meeting and the bank will proceed carefully.
Why is inflation expected to stay high?
The bank points mainly to higher oil prices and refinery margins linked to the Middle East conflict, which raise fuel and business costs.
When is the next decision?
December 9, 2026.
