Bank of Canada minutes: rate fog is no excuse for standing still

Bank of Canada policymakers were blunt in their own notes: sitting still was not an option just because the road ahead looks foggy. Minutes from the October 28 meeting, released Tuesday, show the governing council agreed that "uncertainty did not mean inaction" — but they also pledged to "proceed carefully to assess how economic developments would affect their outlook."

The caution has a price tag attached. The bank flagged higher costs for non-energy imports and lingering questions over how US trade policy will land, two forces it said argue for moving deliberately.

That October 28 meeting is where the bank actually pulled the trigger. It lifted the overnight rate target by 25 basis points, putting it at 2.50%, and raised the Bank Rate to 2.75% from 2.50%. The deposit rate went to 2.45% from 2.20%. It was the first hike since July 2023.

The bank tied the move to sticky inflation, pointing at a surge in oil prices. Pricier fuel pushed up production and transportation costs, which in turn lifted imported industrial and electronics prices.

The tightening followed a long stretch of standing pat. On September 2 the bank held the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%, noting a "broadening recovery" as GDP climbed 3.3% after a weak first quarter but warning that upside inflation risks had grown. Back on July 15 it also held at 2.25%, projecting GDP growth of 0.7% in 2026 and 1.8% in both 2027 and 2028, with inflation returning to the 2% target in 2027.