Bank of Canada Raises Rate to 2.5%

The Bank of Canada raised its policy rate by 25 basis points to 2.5%, its first increase since July 2023, saying rising inflation risks outweighed concerns about trade-related weakness. Governor Tiff Macklem said the inflation outlook had deteriorated as oil prices were expected to remain elevated amid the Middle East conflict, with risks that higher energy and business costs would spread more broadly; inflation was 3.1% in September. The bank also pointed to a more resilient-than-expected Canadian economy and signs that companies were increasingly prepared to pass higher costs on to customers. Macklem said further increases may be needed, and economists generally expect at least one more hike, though they differ on whether it will come in December or January.