The Bank of Canada has raised its key interest rate to 2.5% on Wednesday, marking its first hike in over three years. Bank governor Tiff Macklem stated that the increase was necessary to combat inflation, which has been driven by rising energy prices.
This rate hike means borrowing money will become more expensive for Canadians. The move comes as the central bank aims to curb inflationary pressures that have persisted in the economy.
The decision follows a period of low interest rates, which were maintained to support economic recovery during the pandemic. However, with inflation becoming a growing concern, the Bank of Canada has decided to take action.
Related stories highlight the broader economic context, including the impact on homeowners as pandemic mortgages come under renewal and the revised down forecast for home sales in 2026.