The Bank of Canada is widely expected to raise interest rates another 75-basis points at its
policy meeting today (October 26).
Economists are forecasting continued rate hikes as inflation in Canada remains near a 30-year
high of 6.9%, which is well above the Bank of Canada’s 2% target.
If economists are correct, the newest interest rate increase will bring the central bank’s
trendsetting overnight interest rate to 4%, its highest level since the 2008-2009 financial crisis
more than a decade ago.
September’s inflation rate of 6.9% showed that consumer prices remain stubbornly high across
Canada. Food prices were up 11.4% in September from a year ago, according to data from
Statistics Canada.
So far, the Bank of Canada has lifted interest rates five times this year, triggering concerns
among some economists that the aggressive monetary policy tightening could push the
Canadian economy into a recession.
And, while most economists are forecasting a 75-basis point increase today, taking the bank
rate to 4% from 3.25%, some are predicting that the central bank will raise rates by a full
percentage point to 4.25%.
Bank of Canada Governor Tiff Macklem has said that lowering inflation is the central bank’s top
priority and that continued action is needed to ensure that higher consumer prices do not
become entrenched in the economy.
