The Bank of Canada raised its interest rate to 2.5%

The Bank of Canada raised its key interest rate by 0.25 percentage points to 2.5%. This is the first increase since July 2023. The bank stated that if price growth continues, the rate could be raised again.

In September, annual inflation reached 3.2%, exceeding the bank's 1-3% target range. The rise in prices was most affected by higher energy and transportation costs. According to the new forecast, inflation will reach 3.5% by the end of the year and remain at around 3% for most of 2027.

Canada's economy grew by 3.3% in the second quarter, though a sharp slowdown in growth is expected by the end of the year. Additional challenges stem from the trade dispute with the US and new tariffs.

According to central bank governor Tiff Macklem, the next decision will depend on new inflation and economic data. The rate hike will make mortgages and other loans more expensive.

Source: Investing.com