Will the Bank of Canada Raise Rates in 2026? Why the Big Banks Disagree

For most of the last year, Canada's big banks have been singing in unison: the Bank of Canada is done cutting, but it's not about to hike either. That changed in late 2025. Today, the country's six largest forecasting desks are split on whether the Bank of Canada will raise rates in 2026 at all — and the disagreement is wider than at any point in recent memory.

If you're renewing a mortgage this year, sitting on a variable rate, or pre-approved and shopping, the Bank of Canada rate forecast 2026 question matters. Where the banks line up tells you a lot about the risk on either side of your decision. Here's the split, what's driving it, and how to think about your mortgage when even the experts can't agree.

Where the Bank of Canada Sits Right Now

Before getting into the forecast, the baseline. As of May 2026:

• Policy rate: 2.25% (held four times in a row, most recently April 29, 2026)
• Prime rate: 4.45%
• Best five-year variable (broker channel): Around 3.30% to 3.35%
• Best five-year fixed (broker channel): Around 3.84% to 4.04%
• Stress test qualifying rate: Around 6.41%
• Next BoC announcement: June 10, 2026 — see our preview of what to expect

The Bank of Canada cut aggressively through 2024 and the first half of 2025, then paused. The April 29 hold marked the fourth consecutive meeting at 2.25%. In its April Monetary Policy Report, the Bank flagged two competing risks: oil-driven inflation pulling them toward a hike, and a possible breakdown in Canada–U.S. trade talks pulling them toward a cut. That two-sided risk picture is what the big-bank forecasts are now arguing about. Our full breakdown of the April 29 BoC hold covers the Monetary Policy Report in more detail.

The Bank of Canada Rate Forecast 2026 Split: Scotiabank vs. the Rest

Here's where the six big Canadian banks and Desjardins stand on the Bank of Canada rate forecast 2026.

Scotiabank — the most hawkish. Scotiabank Economics expects the BoC to hold through the first half of 2026, then raise the policy rate by 50 basis points in the second half. They see another 25-basis-point hike in early 2027, taking the policy rate to 2.75% by the end of 2026 and 3.00% in 2027. Scotiabank is alone among the Big 5 in calling for a hike this year.

National Bank — slightly hawkish. National Bank now projects rate hikes to start in the fourth quarter of 2026, possibly the third quarter if employment data stays firm. Their target reaches 2.75% by Q2 2027.

TD — mostly hold. TD notes that markets have priced in at least one hike for 2026 but stops short of calling one itself. Their working assumption is a hold through most of 2026 with hikes pushed into 2027.

RBC — hold through 2026. RBC expects the overnight rate to stay at 2.25% through the rest of 2026 and rise toward the top of the 2.25% to 3.25% neutral range only in 2027.

BMO — hold through 2026. BMO Capital Markets sees the policy rate flat at 2.25% throughout 2026, with an average rate near 2.40% in 2027.

CIBC — hold through 2026. CIBC Capital Markets also expects the BoC to hold at 2.25% all year, rising to 2.75% in 2027.

Desjardins — no near-term hike. Desjardins is on the dovish end. They argue the Bank will stay on the sidelines even if oil prices stay elevated, and that serious hike conversations should not gain traction in the near term.

The bottom line: one bank (Scotiabank) sees 50 basis points of hikes this year. National Bank sees a potential hike starting late in the year. The other four major banks plus Desjardins see no hike in 2026 at all. That's a six-to-one split — the kind of disagreement that usually shows up only at turning points in the cycle.

What's Driving the Disagreement

The split is not about who has better data. It's about which risk each desk thinks the BoC is more worried about.

The case for hikes (Scotiabank, National Bank):

• Oil prices stayed elevated through April after the Iran war and Strait of Hormuz disruption. WTI sat near $95 to $100 a barrel through most of April. Our deep dive on the Iran war and Canadian mortgage rates covers the chain from oil to bond yields to fixed mortgage rates.
• CPI inflation jumped to 2.4% in March, up from 1.8% in February. The Bank of Canada itself projects CPI to peak near 3% in April.
• Canadian GDP growth has been firmer than the Bank expected, and the labour market is holding up.
• Markets have already priced in roughly 50% odds of one hike by year-end.

The case for holding or cutting (RBC, BMO, CIBC, TD, Desjardins):

• The CUSMA trade review on July 1, 2026 is a real downside risk. If U.S.–Canada trade talks fall apart, the economic hit could push the BoC to cut rather than hike.
• The Bank explicitly named CUSMA as the cut trigger in its April Monetary Policy Report.
• Inflation expectations remain anchored. The April CPI spike looks oil-driven and is expected to fade by 2027.
• The 60%-plus renewal wave in 2025 and 2026 already raises payments for millions of households. The BoC may not want to add to that pressure.

This is a textbook two-sided risk. Whichever way the BoC moves first will surprise about half the market. The downside scenario for Alberta mortgages walks through what happens if trade talks fall apart and the BoC cuts instead.

What This Means for Variable-Rate Mortgages

Variable-rate mortgages move with prime, which moves with the Bank of Canada's overnight rate. If the BoC holds, your variable payment doesn't change. If it hikes by 50 basis points, prime moves to 4.95% and your variable rate moves up by the same amount.

A few things to keep in mind:

• The downside is real but limited. Even Scotiabank's most aggressive call is only 50 basis points of hikes by year-end. On a $500,000 mortgage with 25 years left, that's roughly $130 a month more in interest cost. Painful, not catastrophic.
• The upside is also real. If trade talks fall apart and the BoC cuts instead, variable holders get the benefit immediately. Fixed holders sit on whatever they locked.
• The spread to fixed is still meaningful. Variable at around 3.30% to 3.35% sits about 0.50% to 0.70% below fixed at 3.84% to 4.04%. That's real money over a five-year term.

If your budget can absorb a $130-a-month payment shock and you can stomach some uncertainty, variable is genuinely in play. Our deeper guide on variable vs fixed rate mortgages walks through the math on a sample file.

What This Means If You're Renewing in 2026

About 60% of Canadian mortgages are renewing in 2025 and 2026. June is the heaviest five-year renewal month of the year. If you took your last five-year fixed in 2021 at 1.65% to 2.00%, your renewal is landing near 3.84% to 4.04% — a payment increase of roughly $400 to $500 a month on a $500,000 balance.

Three takeaways for renewers given the rate-forecast split:

• Don't sign the bank's first offer. A TD survey showed 67% of Canadian homeowners are uneasy about renewal. The branch's first quote is rarely the best. Broker channels regularly find rates 0.20% to 0.50% lower.
• Switching at renewal is stress-test free. Since November 2024, you can switch lenders at renewal without re-qualifying under the stress test. That gives you real leverage, even if your income or credit has changed. Our guide on switching lenders at renewal without the stress test walks through the details. Our renewal strategy guide for 2026 covers the math on switch vs. stay.
• Three-year fixed is worth a look. If you're nervous about locking five years into a high-fixed scenario but don't want full variable exposure, three-year fixed near 4.59% gives you a middle path. You're back in the market in 2029 — by which point the rate path will be much clearer.

The biggest mistake right now is treating the renewal letter as a single take-it-or-leave-it offer. The second-biggest is locking five years fixed without weighing variable or three-year fixed.

What This Means If You're Pre-Approved or Shopping

If you're house-hunting, the Bank of Canada rate forecast 2026 split doesn't change the playbook much — but it does change the urgency.

• Get a rate hold today. Most lenders will hold a five-year fixed rate for 90 to 120 days at no cost. That hold protects you against any move in either direction. If Scotiabank is right and rates rise, your hold saves you. If the other banks are right and rates fall, you renegotiate the hold or float down with most lenders. The hold is a one-way option.
• Confirm what your hold actually covers. Some pre-approvals lock the rate but not the qualifying amount. If you upgrade the property or change the deal structure, the hold can be voided. A broker conversation makes this clear up front. Our mortgage pre-approval Calgary guide explains what a strong pre-approval looks like.
• Don't try to time the bond market. The April spike in fixed rates from 4.04% to nearly 4.95% happened in three weeks. So did the partial reversal. Acting on a solid pre-approval beats waiting for a bottom that may not arrive.

For first-time buyers in particular, qualifying and the rate hold matter far more than guessing the BoC's next move.

How Gold Lion Mortgages Can Help

The Bank of Canada rate forecast 2026 split is a feature of the cycle, not a bug. Nobody knows whether the next move is a hike, a hold, or a cut — including the Bank of Canada. The right mortgage strategy doesn't bet on one outcome. It picks a structure that holds up across all three.

At Gold Lion Mortgages, we work with major banks, credit unions, and B-lenders across Alberta. Clients usually leave the first conversation with three things:

• A side-by-side comparison of variable, three-year fixed, and five-year fixed built on their specific file
• A current rate hold to protect against the next move in bond yields and the BoC
• A clear renewal or pre-approval plan they can act on this week

If you're renewing this spring or summer, we'll review your current mortgage, run the math on switching versus staying, and shop the broker market against your bank's renewal letter. If you're shopping for a home, we'll lock a rate hold today and walk you through what your qualifying actually looks like across the lender options. You can also review our mortgage broker Calgary page for a fuller view of how we work.

Call us at (403) 404-0048 or apply online to start the conversation.

Frequently Asked Questions

Will the Bank of Canada raise rates in 2026?

The big banks disagree. Scotiabank expects 50 basis points of hikes in the second half of 2026, taking the policy rate to 2.75% by year-end. National Bank sees a possible hike in Q3 or Q4 2026. RBC, BMO, CIBC, TD, and Desjardins all expect the Bank of Canada to hold at 2.25% through 2026, with hikes pushed into 2027. The market is pricing roughly a 50% chance of one hike by year-end.

What is the Bank of Canada rate forecast for 2026?

The current policy rate is 2.25%, held since the fourth consecutive pause on April 29, 2026. Forecasts for the end of 2026 range from 2.25% (RBC, BMO, CIBC, TD) to 2.75% (Scotiabank). The next announcement is June 10, 2026. The Bank has flagged two competing risks: oil-driven inflation pushing toward a hike, and a possible CUSMA trade breakdown pushing toward a cut.

Should I go variable or fixed if banks disagree on rate forecasts?

There is no single right answer. Variable at around 3.30% to 3.35% is below five-year fixed at 3.84% to 4.04%. If the dovish forecasters (RBC, BMO, CIBC) are right, variable wins. If Scotiabank is right, variable holders see roughly $130 a month more on a $500,000 mortgage by year-end. Variable suits stable cash flow and some payment-change tolerance. Fixed suits buyers who want full predictability. A broker review can run both numbers on your specific file.

When is the next Bank of Canada rate announcement?

The next scheduled rate announcement is June 10, 2026, followed by July 30 and September 17. The Bank will publish a full Monetary Policy Report alongside the July decision. Most analysts expect the BoC to hold again in June, with any move more likely later in the year.

What does Scotiabank's hike call mean for my mortgage?

If Scotiabank is right and the Bank of Canada raises rates by 50 basis points in the second half of 2026, prime would move from 4.45% to 4.95%. On a $500,000 variable-rate mortgage with 25 years left, the monthly payment rises by roughly $130. Fixed-rate mortgages already locked in stay unchanged for the rest of the term. Variable holders considering a conversion to fixed should run both numbers — converting at the current conversion rate is often higher than today's best new-business fixed rate.

Published: May 18, 2026. Mortgage guidelines, lender programs, and qualifying requirements change. Contact Gold Lion Mortgages to confirm current requirements for your file.