Bank of Canada Holds Interest Rate at 2.25%: What Higher Oil Prices and Possible Rate Hikes Mean for Your Wallet

The Bank of Canada has held its benchmark interest rate steady at 2.25% for the fourth time in a row. But don’t get too comfortable. Rising oil prices due to global conflict could force future rate hikes, and higher gas prices are already hitting your wallet.

Here’s what this means for you, right now.

Key Impact: Higher Costs at the Pump and Possible Borrowing Increases

The average price of gasoline in Canada has jumped nearly 40 cents per litre over the past month. That’s a direct hit to your monthly budget. Annual inflation rose to 2.4% in March, up from 1.8% in February. While inflation is still within the Bank’s 1-3% target range, core inflation remains near 3%.

Governor Tiff Macklem warned that if oil prices stay elevated, the Bank may need to raise rates. Markets are now pricing in two to three quarter-point rate hikes starting in October 2026. That means your variable-rate mortgage, car loan, or business loan could cost you more later this year.

What You Should Do

If you have a variable-rate mortgage or loan: Consider locking in a fixed rate now. If rates rise, your monthly payments will increase. Locking in gives you certainty.
Budget for higher gas prices: Energy costs may stay high for months. Adjust your spending on other items to offset the extra cost at the pump.
Monitor Bank of Canada announcements: The next rate decision is June 10, 2026. Watch for signals of a rate hike.
Check your lender’s communications: Your bank will notify you if your variable rate changes. Don’t ignore those emails or letters.
If you have savings: Higher interest rates could mean better returns on high-interest savings accounts or GICs. Shop around for the best rates now.

Who Is Affected

Variable-rate mortgage holders: You are most at risk. A quarter-point hike could add roughly $50 per month per $100,000 borrowed.
Anyone with a car loan or line of credit tied to the prime rate: Your payments will rise if the Bank raises rates.
Small business owners with variable-rate loans: Higher borrowing costs could squeeze your margins.
Drivers: You are already paying more at the pump. If oil prices stay high, this will continue.
Savers: You could benefit from higher interest rates on savings accounts and GICs.

Bottom Line

The Bank of Canada is holding rates steady for now, but rising oil prices and inflation are pushing it toward future rate hikes. You should prepare for higher borrowing costs and higher gas prices. If you have variable-rate debt, consider locking in a fixed rate. If you have savings, look for better returns. The next rate decision is June 10, 2026 — mark your calendar.