War in Iran will lead to higher inflation: Bank of Canada
Posted Mar 19, 2026 6:53 am.
Expect global inflation to get higher in the near-term with the war in Iran, that’s the message from the Bank of Canada as it keeps its key interest rate the same.
The Bank of Canada holding its key interest rate at 2.25 per cent in its latest update, noting while the price for fuel is expected to contribute to a rise in total inflation, it’s too early to determine the war’s impact on the Canadian economy.
While the Bank of Canada takes a wait and see approach, homeowners like Tim Buckley, are happy they locked in a rate at the beginning of the year.
“We’ve been OK so far, but it’s obviously a bit of a concern when you see things continuing to go the upward direction so we’re keeping a close eye on things,” he said.
But for people who haven’t locked in, they are being advised to do so, sooner rather than later, with mortgage professionals like Max Singh saying the war in Iran is affecting fixed-rate mortgages.
Singh says he’s been hearing from nervous clients who got a mortgage during the pandemic, when rates were low, and now are set to renew their mortgage this year.
“What we’ve seen is interest rates start to rise again, in the last week plus or since the inception of the conflict, we’ve seen the five-year Canada bond yield rise so in effect in the last couple of days seen interest rates rise,” he said.
As household debt now reaches $3.2 trillion, with Canadians owing $1.77 for every $1 they have, according to Statistics Canada, the financial implications of the war could be wide-reaching.
“People have struggled to pay their debt for a long period of time, and I think we are getting to the point where people are struggling to make even those more important payments like their mortgages on a regular basis,” said Mark Kalinowski, a financial educator with the Credit Counselling Society.
But if you’re in a financial pinch, experts say there are options available.
“Extending your amortization to help reduce the impact on your payment increase, potentially looking at different types of terms, shorter longer terms per se,” Singh said. “We’ve seen some clients introduce the concept of rightsizing.”
“If you’re struggling, finding it hard to make ends meet, you’re seeing your credit card balance rise, even though you’re making the minimum payment on it, it’s time to ask for help,” Kalinowski added.
