Bank of Canada raises benchmark rate to 2.5% after three-year pause
The Bank of Canada increased its policy rate by 0.25 percentage point to 2.5%, its first hike since July 2023, and will publish revised inflation and growth forecasts.
The Bank of Canada raised its benchmark interest rate by a quarter percentage point on Wednesday, bringing the policy rate to 2.5%. The adjustment ends a three-year period without increases and follows a year-long hold at 2.25% that began in October 2025 after a prior cut from 2.5%.
Economists had anticipated the move as the central bank confronts higher oil and gas prices linked to the ongoing Iran conflict and other geopolitical tensions, which could translate into broader price pressures.
In conjunction with the rate decision, the Bank of Canada will release updated projections for inflation and economic growth.
"The decision reflects the Bank's assessment of evolving risks to the Canadian economy," a Bank of Canada spokesperson said.
Financial markets and a Reuters poll of economists had expected a quarter-point increase, marking the first change to the key lending rate since July 2023.