Canada's Interest Rate Burden Climbs as Debt, Yield Advance, BMO Says

06:56 AM EDT, 09/23/2026 (MT Newswires) -- The sustained rise in global yields is increasing fiscal pressure by driving up the Canadian government's interest costs, according to BMO Capital Markets in a note. One useful measure is the interest payment-to-revenue ratio, which shows the share of government revenue consumed by interest payments, wrote the bank in the Tuesday note. For Canada, the ratio peaked at more than 35% in the early-to-mid-1990s, contributing to the austerity measures introduced in the late 1990s, said the bank. It then declined steadily, falling below 6% in the early 2020s. However, pandemic-era borrowing and higher interest rates have since pushed the ratio back up to nearly 11%, added BMO. The level remains manageable, but the upward trend warrants close watch as higher yields continue to increase the cost of servicing Canada's debt, said the bank.