The Bank of Canada says further increases may be needed as inflation proves more persistent.
The Bank of Canada raised its overnight policy rate by a quarter point to 2.5% on Oct. 28. BNN Bloomberg reported it was the first increase since July 2023.
The bank said inflation has been higher and more persistent than it projected in July, and it wants to limit the risk that high energy prices spread to other prices. Inflation has been around 3% since April and is expected to rise to about 3.5% by year-end, returning to 2% around mid-2028.
The bank forecasts growth of 1% this year and 2% in both 2027 and 2028. It said further increases could be needed but it will proceed carefully. The next decision is Dec. 9.
What it means for you: If you have a variable-rate mortgage or line of credit, check with your lender about changes to your rate or payments. Next decision: Dec. 9.
Source: bankofcanada.ca: Bank of Canada raises the policy rate by 25 basis points to 2½%