Bank of Canada head sees less room for monetary accommodation
TLT•The Bank of Canada raised its policy rate by 25 basis points to 2.5%, its first increase since July 2023. It said inflation is expected to stay at or above 3% through much of 2027 and that further rate increases may be needed.
1. Rate increase announced
Governor Tiff Macklem said the Bank of Canada raised its policy interest rate by 25 basis points to 2.5%. The Bank said inflation risks had increased and there was less scope for monetary accommodation.
2. Inflation and growth outlook
The Bank expects inflation to rise to about 3.5% by year end and remain at or above 3% through much of 2027, before returning close to its 2% target by the middle of 2028. It projected economic growth of 1% in 2026 and about 2% in both 2027 and 2028.
3. Further decisions uncertain
Macklem said the Bank would make future decisions one meeting at a time and proceed carefully given uncertainty. He said there could be a need to raise the policy rate further.
