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Canada

Bank of Canada signals possible further rate hikes but will move carefully

Minutes show the central bank may raise its policy rate again if energy-driven inflation spreads, affecting borrowing costs for households and businesses.

Photo: Winnipeg Free Press

What happened

The Bank of Canada's governing council says it may need to raise interest rates further but is proceeding carefully, according to minutes of its recent deliberations. Yahoo Finance+4 The council said it would decide monetary policy one meeting at a time, as new data arrive. NetNewsLedger+2 In October the bank raised its policy rate by a quarter point to 2.5 per cent, its first increase since 2023. Yahoo Finance+3 Officials agreed that uncertainty did not mean inaction, and that they would need to proceed carefully on policy. MarketScreener UAE Emirates

Around it

Officials cited considerable uncertainty from U.S.-Canada trade friction, the U.S.-Iran war, and how quickly firms would pass higher input costs on to prices. MarketScreener UAE Emirates+1 The bank expects inflation to top 3.5 per cent by the end of 2026 and to remain above 3 per cent into 2027 before slowing to 2 per cent by mid-2028. Yahoo Finance+1 Businesses have largely absorbed higher costs so far, but surveys suggest more firms expect to pass them to customers next year. NetNewsLedger+1

Sources

  1. Yahoo FinanceBank Of Canada Minutes Show Careful Deliberations On Rate Hikes
  2. NetNewsLedgerNetNewsLedger, Bank of Canada says another rate increase may be needed as energy costs spread
  3. Winnipeg Free PressBank of Canada moving carefully, but further hikes might be needed: meeting summary
  4. MoneySenseBank of Canada moving carefully, but further hikes might be needed: meeting summary
  5. MarketScreener UAE EmiratesBank of Canada Raised Rates to Mitigate Inflation Risk, Minutes Say
  6. CHCHFurther interest rate hikes possible: Bank of Canada

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