Bank of Canada raises policy interest rate by 25 basis points to 2.5% due to persistent inflation concerns

The Bank of Canada increased its target for the overnight rate by 25 basis points to 2.5% on October 28, 2026, marking its first rate hike since July 2023. The central bank cited higher and more persistent inflation, driven by elevated energy prices, as the primary reason for the decision. The Bank also revised its projected average inflation rate upward and indicated that further rate increases could be necessary.