Bank of Canada expected to raise its key policy rate for first time since July 2023

The Story

The Bank of Canada is expected to raise its benchmark policy rate this morning, marking the first rate increase in nearly a year.

Financial markets and a poll of economists are betting on a quarter-point hike to the Bank’s policy rate, which has been held at 2.25 per cent for nearly a year.

Economists generally view the current level as providing some support to the economy, even as the bank faces uncertainty tied to a tariff dispute with the United States.

In its communications, the Bank of Canada has said it would look through an initial inflation bump associated with higher energy prices, but would increase the policy rate if it sees evidence that price pressures are spreading beyond energy costs.

Alongside the rate decision, the Bank of Canada is set to release updated forecasts for inflation and economic growth.