The USD/CAD pair rose for the third consecutive day, trading around 1.4060 on October 28. Ahead of the Bank of Canada's announcement, markets anticipated a 25-basis-point interest rate hike. The central bank subsequently raised its key rate to 2.5%, marking its first increase since July 2023. Governor Tiff Macklem stated the move aims to prevent surging energy prices from triggering broader inflation.
The bank sees higher energy prices potentially spreading to goods and services, raised its 2027 inflation forecast to 3.1% and kept further tightening on the table.
Read the full storyThe bank raised its inflation forecast to 3.5% by the end of 2026 and left the door open to another increase, pledging to proceed cautiously amid uncertainty over the conflict and energy prices.
The bank expects inflation to remain above 3% through the third quarter of 2027, kept the possibility of further increases open and said future decisions would take uncertainty into account.