The Bank of Canada raised its benchmark interest rate by 25 basis points to 2.50% on Wednesday, its first increase since July 2023 and the end of a seven-meeting holding streak. The widely expected move — forecast earlier in the week — makes Canada’s central bank the latest to move against resurgent price pressures.
Governor Tiff Macklem struck a hawkish tone, warning that “further increases might be needed to prevent soaring energy costs from fueling broader inflation.” The bank sharply raised its inflation forecast for 2027 to 3.1%, up from 2.0% in its July projection, acknowledging that price pressures are proving far more stubborn than anticipated.
The data back up the caution. Inflation ran at 3.2% in September, the bank expects it to reach around 3.5% by the end of 2026, and it does not foresee a return near the 2% target until mid-2028. Meanwhile the labor market is weakening: the economy shed 110,000 jobs in just two months, leaving policymakers balancing hot inflation against cooling employment.
Markets will now watch the December 9 decision for the next signal. With the bank openly keeping the door to further hikes ajar, Canadian borrowers should expect borrowing costs to stay elevated — and possibly rise again — deep into next year.
Read also: Bank of Canada expected to hike rate to 2.50% and US and Canada in talks to ease steel and auto tariffs
Bhudev Bhagaliya is an experienced and senior journalist who has carved a distinct niche for himself in the world of Hindi journalism through his profound understanding and precise writing style. With over two decades of experience in the field of journalism, he has held key responsibilities at Dainik Hindustan for 12 years and at Amar Ujala for one year. Currently, he serves as the Content Editor for the Jagrook Youth News newspaper and portal, where he plays a crucial role in ensuring the quality and credibility of the news content. Bhudev Bhagaliya consistently writes about issues that help raise awareness within society and among the younger generation.