The Bank of Canada raised interest rates to prevent the risk of rising inflation caused by rising energy prices, and said it may be necessary to further raise borrowing costs. Policymakers led by Governor Tiff Macklem raised the benchmark overnight interest rate to 2.5% on Wednesday, the first rate hike in more than three years. This rate hike is in line with market expectations, and it is also the unanimous expectation of economists in the Bloomberg survey. “The Governing Council decided to raise policy interest rates to reduce the risk that continued high energy prices would spread widely to the prices of other goods and services,” the Bank of Canada said in a statement. “Further increases in policy interest rates may be necessary, but given the uncertainty, the management committee agreed to proceed with caution,” the bank said. Since September, the Bank of Canada has been increasingly worried that the rise in oil prices due to the Middle East conflict will spread to the prices of other goods and services. Currently, the Bank of Canada does not expect the inflation rate to return to the target level of 2% until mid-2028.

Disclaimer:Webull uses external vendor Google Translation Service for news translations where we endeavour to ensure these are correct, however, we recommend that you please double-check this information accordingly. Webull is not responsible for translation errors or issues.