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Central BanksMediumUpdated•Originally published 3 November 2026•Updated 3 November 2026•
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Bank of Canada Hikes Rates as Inflation Outlook Worsens on Energy Costs

Key Facts

1The Bank of Canada raised its policy rate as the inflation outlook deteriorated and energy prices are expected to stay high.
2The bank expects CPI to rise to 3.5% by year-end and remain above 3% through 2027.

The Bank of Canada raised its policy rate as the inflation outlook deteriorated and energy prices are expected to stay high. FXStreet reported that Governor Tiff Macklem signaled further hikes may be necessary due to persistent inflationary pressures.

The bank expects the Consumer Price Index to rise to 3.5% by year-end and remain above 3% through 2027. This decision follows a previous rate increase to 2.5% on October 28, 2026, while Gross Domestic Product data from October 30, 2026, showed a 0.1% contraction for September.

The Canadian Balance of Trade is scheduled for release on November 4, 2026, followed by Employment Change and Unemployment Rate data on November 6, 2026.

Latest Updates · 1

  1. Notable·

    Update: Markets are currently pricing a 56% probability of a further rate hike in December. While a slowdown is projected for the fourth quarter due to US tariffs, economic growth is expected to rebound to 2% during 2027 and 2028.