Bank of Canada raises its key rate to 2.5 per cent and says another hike is possible

Key rate

2.5 % overnight rate

The Bank of Canada raised its key rate by 25 basis points to 2.5 per cent on Wednesday, its first increase since July 2023.

The bank said it acted to stop high energy prices from spreading to other goods and services. Inflation reached 3.2 per cent in September.

“There could be a need to increase the policy rate further, but given uncertainties, we will proceed carefully.”

— Governor Tiff Macklem

The bank expects inflation to end the year near 3.5 per cent and return to about two per cent by mid-2028. It sees growth of one per cent this year and two per cent in 2027 and 2028.