Bank of Canada raises interest rates for the first time in three years

The Bank of Canada raised its key interest rate by a quarter point to 2.5 percent on Wednesday, its first increase since July 2023. It warned that further hikes might be needed if high energy costs spread into broader inflation. Annual inflation reached 3.2 percent in September, driven mainly by energy and transportation costs, and the bank raised its 2027 inflation forecast to 3.1 percent. Governor Tiff Macklem expects inflation to return close to the 2 percent target by mid-2028.