The two central banks are now moving in opposite directions. On 16 September 2026, the Federal Reserve raised the federal funds target range by a quarter point to 3.75%–4.00%, its first increase since 2023 (Federal Reserve). Two weeks earlier, on 2 September, the Bank of Canada held its overnight rate at 2.25% (Bank of Canada).
Where each is heading
- United States: The September projections point toward one more hike this year, with the median year-end 2026 range at 4.00%–4.25% (Bondsavvy). The Fed cited elevated inflation and Middle East energy pressures.
- Canada: The Bank has now held seven times in a row since its October 2025 cut. Most bank economists expect a hold through 2026 (nesto). The next decision and Monetary Policy Report arrive on 28 October 2026.
What the gap means for private lenders
- Cost of capital diverges. US lenders funding with warehouse lines or floating-rate debt face rising costs. Canadian lenders with CAD funding may find US borrowers more willing to pay private-lending rates.
- Currency risk grows. Wider rate gaps tend to move the CAD/USD exchange rate. Lenders funding in one currency and lending in the other should consider hedging or currency-matched structures.
- Watch the legal ceilings. Rising US rates push some pricing closer to state usury limits, such as New York's 25% criminal cap or Florida's 18% general limit. In Canada, remember that fees count toward the 35% APR criminal rate on smaller and individual loans.
Quick take
For Canadian capital looking south, the widening gap shifts relative pricing in favor of US deals. Price every deal to the governing state's usury rules, and hedge the currency.
This content is general information for industry professionals and is not legal, tax or financial advice. Laws change and apply differently to each transaction; obtain advice from qualified counsel in each relevant jurisdiction. Legal counsel to the Cross-Border Private Lenders Association: Jasmine Daya & Co. Questions: info@cbpla.com