Bank of Canada lifts policy rate to 2.5%, first hike since July 2023

The Bank of Canada has raised its policy rate to 2.5%, ending a run of unchanged rates that stretched back to July 2023. The decision surfaced in the central bank's recent meeting minutes. The target: inflation that has stayed stubborn and broad-based across the economy.

Energy prices are doing much of the pushing, with geopolitical tensions in the Middle East feeding into costs. Under Governor Tiff Macklem, the Bank is putting inflation control first — but it isn't promising a rapid series of hikes. It stays cautious about further adjustments while economic uncertainty lingers. Senior Deputy Governor Carolyn Rogers is among the officials whose public comments could reveal where policy heads next.

Markets now turn to Canadian CPI and GDP releases for a read on whether price pressures are easing or building. Global energy markets and any shift in geopolitical tensions could change the odds of another hike at the December meeting, the Bank's next scheduled decision point.