The Bank of Canada raised its policy rate 25bps to 2.50% on Wednesday, its first increase in more than three years. The bank expects inflation to remain well above its 2% target through 2028. BOC Governor MACKLEM said further rate increases may be necessary to curb inflation, while officials will proceed cautiously. He said the hike was needed to prevent elevated energy prices from spreading into broad-based inflation. Elevated uncertainty from a US-Canada trade dispute and the Middle East confl

The Bank of Canada raised its policy rate 25bps to 2.50% on Wednesday, its first increase in more than three years. The bank expects inflation to remain well above its 2% target through 2028. BOC Governor MACKLEM said further rate increases may be necessary to curb inflation, while officials will proceed cautiously. He said the hike was needed to prevent elevated energy prices from spreading into broad-based inflation. Elevated uncertainty from a US-Canada trade dispute and the Middle East conflict keeps the bank vigilant. The BOC also raised its growth forecast, citing strong consumer spending and exports and an expected pickup in business investment as firms adopt AI and use a new tax-credit introduced by the prime minister.