The Bank of Canada raised its target for the overnight rate by 25 basis points to 2.50% on October 28, its first increase since July 2023, citing inflation running around 3% and an economy that has proved more resilient than expected.
The Bank of Canada on Wednesday raised its target for the overnight rate by 25 basis points to 2.50%, its first increase since July 2023. The Bank Rate now stands at 2.75% and the deposit rate at 2.45%.
The Bank said CPI inflation has been around 3% since April and is expected to rise to about 3.5% by year-end, while inflation excluding gasoline was 2.2% in September and core measures remain close to 2%. It put economic growth at 3.3% in the second quarter, with recent indicators pointing to about 2% in the third quarter, and forecast growth of 1% in 2026 followed by 2% in both 2027 and 2028. Unemployment has been around 6.5% for several months.
The move had been widely expected: a Reuters poll published before the decision pointed to a hike to 2.50% on October 28. The decision itself, rather than the expectation, is the new event.
The figures in this article come from the Bank's own announcement, and independent coverage from Reuters and Canadian outlets matches the 25-basis-point move to 2.50%. Where secondary reports differed on September's headline inflation figure, this article sticks to the Bank's own description of inflation at around 3% since April.
Governing Council said there could be a need to increase the policy rate further, but given the uncertainties it agreed to proceed carefully. The Bank pointed to the conflict in the Middle East, now in its eighth month with no clear path to resolution, among the uncertainties clouding the outlook.
The next scheduled rate announcement is December 9, 2026, and the next Monetary Policy Report is due January 27, 2027.