A Tuesday summary of the Bank of Canada’s most recent rate decision says the governing council may need further hikes but will proceed on a meeting-by-meeting basis.
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The Bank of Canada’s governing council believes it might need to raise interest rates further, according to a summary of deliberations released Tuesday after the bank increased its key policy rate.
The summary said members faced “considerable uncertainty” and agreed to take monetary policy decisions “one meeting at a time,” citing uncertainty around the war in the Middle East, Canada–U.S. trade relations, global financial conditions, the speed and extent of pass-through, and how businesses and households would respond.
The bank raised its policy interest rate by a quarter of a percentage point to 2.5 per cent last month to reduce the risk that stubbornly high oil prices become persistent inflation. The summary said members exchanged views on whether a higher rate was needed to mitigate the risk that higher energy costs spread to other goods and services, while also noting monetary policy cannot lower global energy prices but can prevent generalized inflation.
The decision came as the Bank of Canada raised its outlook for the annual inflation rate to reach 3.5 per cent at the end of this year and remain above three per cent for much of 2027. The summary said higher costs have largely not been passed through to consumers so far, but surveys suggest businesses expect to raise some prices over the next year.
The Bank of Canada’s next scheduled interest rate decision is set for Dec. 9.
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