Bank of Canada raises its policy rate to 2.50%

The Bank of Canada announced a 0.25 percentage point increase in its policy rate to 2.50% on October 28. It aims to limit the spread of energy costs to other prices. [1]

An effect on credit

Reuters notes that this is the first increase since July 2023. The agency reports that it could raise lending and mortgage costs while slowing growth. [2]

A contested trade-off

Economists opposed to an increase argue that core inflation remains near 2% and worry about weakening the recovery, Reuters reports. Their concern highlights the trade-off between controlling prices and supporting activity. [2]

The next step remains open

The Bank has not ruled out another increase but plans to proceed cautiously amid uncertainty. Its next decision is scheduled for December 9. [1]