Bank of Canada raises interest rates for the first time in three years
Summary
The Bank of Canada raised its key interest rate by a quarter point to 2.5 percent, its first increase since July 2023. The bank said higher energy costs could spread into broader inflation and warned that further increases may be needed, while forecasting 1 percent economic growth this year and 3.1 percent inflation in 2027.Key Facts
- The rate increase was the first in more than three years.
- Canada’s annual inflation rate reached 3.2 percent in September, above the Bank of Canada’s 1 to 3 percent target range.
- The bank expects inflation to end the year at 3.5 percent and remain near 3 percent for most of 2027.
- The bank forecast economic growth of 1 percent this year, up from its previous 0.7 percent forecast.
- The bank projected that growth would slow from an annualized 3.3 percent in the second quarter to 0.8 percent in the fourth quarter.
- The bank raised its growth forecasts for 2027 and 2028 to 2 percent from 1.8 percent.
- The bank’s next interest-rate decision is scheduled for December 9.
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