TOP STORY
BoC Hikes to 2.5% as Construction Costs Keep Climbing
The Bank of Canada raised its overnight rate 25 basis points to 2.5% on Wednesday, its first hike since 2023, and warned it “may need” to go further. The reason is oil: with the Middle East conflict in its eighth month and “no clear path to resolution,” the Bank sees CPI near 3.5% by year-end and averaging 3% in 2027. Core measures sit near 2%, so this is insurance against energy costs spreading, not a response to an overheating economy. RBC calls it “risk management” and expects roughly 100 bps of total hikes. For contractors the timing stinks. Floating-rate construction loans just got costlier, and Statistics Canada says non-residential building costs are up 4.3% from a year ago. Alberta producers gain from high crude, but a builder in Surrey or Calgary pays the fuel, steel and borrowing bill either way.
THE NUMBERS — STATISTICS CANADA
Building Construction Price Indexes, Q3 2026 — Non-residential costs rose 1.2% on the quarter (+4.3% year over year); residential rose 0.8% (+2.7%). Builders blamed materials, fuel, freight and labour, plus Canada’s retaliatory tariffs of 15% to 50% (up to 50% on some steel and aluminum) effective September 8. Structural steel framing led non-residential at +3.3%. Vancouver was among the mildest on residential at +0.2%; Prairie builders flagged capacity and wage pressure. Statistics Canada
Payroll Employment and Job Vacancies, August 2026 — Payrolls fell 49,600 (-0.3%), partly as Census hiring wound down. Construction lost 4,500 jobs on the month, but is up 10,700 year over year, with Alberta (+4,200, +2.1%) leading. Alberta job vacancies are up 19.7% from a year ago. Statistics Canada
FROM THE ECONOMISTS
RBC Economics — Bank of Canada applies preventative medicine, hikes rates as inflation risks grow — Expects another hike in December or January. Sees more downside risk to growth than the BoC; 2027 GDP forecast of 1.6% versus the Bank’s 2.0%. Rate-sensitive sectors like housing “could be impacted more.”
TD Economics — The Bank of Canada raised its interest rate on October 28 — Expects one more hike to 2.75%, the middle of the neutral range, then a cautious pause to avoid overtightening an economy adding few jobs.
ATB Economics — Relatively speaking — Calls the Bank’s 4% business investment forecast “a tad optimistic” and argues Canada needs major projects built, fewer internal trade barriers and more non-US exports. Expects further hikes around year-end.
WORTH WATCHING
August GDP, Friday — Statistics Canada releases GDP by industry on October 30. Look for construction and the BoC’s Q3 growth call of roughly 2%.
BoC, December 9 — The next decision comes before the January 27 Monetary Policy Report. Markets and bank desks lean toward another hike.
IN BRIEF
BNN Bloomberg — Bank of Canada rate hike highlights Alberta’s economic balancing act. On a new $500,000 mortgage, the hike adds about $66 a month, while Calgary buyers are seeing more listings and builder incentives.
BNN Bloomberg — “We think it’s premature”: expert reaction to the hike. Critics say the move comes too early given trade uncertainty; others expect a December follow-up.
COFFEE & CONSTRUCTION
Every Monday, Wednesday and Friday, ICBA's Jordan Bateman serves up a 10-minute rundown of the news facing BC and Alberta construction on the Coffee & Construction podcast. Catch the latest episode: DOERKSON WINS!!! | ICBA Coffee & Construction #46. Subscribe free on YouTube (@ICBATV), ICBA's socials, or wherever you download podcasts.