Financial News: Bank Of Canada Raises Rates By Quarter Point

Bank Of Canada Raises Rates By Quarter Point Amid Rising Cost Pressures

10/28/2026 - 10:14:00 (RTTNews)

(RTTNews) - After leaving interest rates unchanged for seven consecutive meetings, the Bank of Canada on Wednesday announced its widely expected decision to raise rates by a quarter point.

The Bank of Canada said it decided to increase its target for the overnight rate by 25 basis points to 2.5 percent, with the Bank Rate at 2.75 percent and the deposit rate at 2.45 percent.

The Canadian central bank's Governing Council said the rate hike is intended to reduce the risk that continuing high energy prices spread broadly to the prices of other goods and services.

The BoC also said there could be a need for further rate increases but agreed to proceed carefully due to elevated uncertainty.

The decision to raise rates comes as the BoC noted that cost pressures are building, with high fuel prices raising the costs of production and transportation.

"While businesses have mostly absorbed higher input costs so far, Bank surveys suggest cost pass-through will increase over the next year," the BoC said.

Meanwhile, the Canadian central bank said economic growth is expected to slow in the fourth quarter of 2026 due to new U.S. tariffs before picking up again in 2027.

The anticipated rebound is supported by business investment, exports and fiscal measures, the BoC said but noted consumption growth is expected to moderate and housing to remain relatively weak.

The Bank of Canada's next monetary policy meeting is scheduled for December 9th.

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