The Bank of Canada raised its overnight rate by 25 basis points to 2.5% on October 28. It projects inflation averaging 3% in 2027 before returning to 2% in mid-2028, citing persistent energy costs and greater business cost pass-through. Growth has improved, but new U.S. tariffs are expected to slow activity in the fourth quarter. Governing Council said further increases could be needed, while stressing that uncertainty requires a careful approach.
Related currencies / asset groups: CAD
The Bank says higher and more persistent inflation, alongside improved growth, warrants an increase to reduce energy-cost spillover risks.
The Bank of Canada increased the overnight target by 25 basis points to 2.5%.
Bank of CanadaThe Bank projects CPI inflation averaging 3% in 2027, returning to 2% in mid-2028; further rate increases could be needed, but it will proceed carefully.
Bank of CanadaLimitation: Canada-U.S. trade relations and the Middle East outlook remain uncertain; further tightening is possible rather than assured.
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