Bank of Canada Sounds Alarm on Gas Prices, Eyes Interest Rate Hike Risk

The Bank of Canada's governing council expressed concern over high gas prices and warned that interest rates may need to be hiked. At their meeting earlier this month, policymakers kept the policy rate at 2.25% for a seventh consecutive time. However, Governor Tiff Macklem struck a hawkish tone, stating that inflation was too high and upside risks had increased.

The Bank of Canada's concern is centered around the potential for gasoline prices to continue rising and subsequently passing through to other goods and services. The longer gas prices remain elevated, the more likely it will be for interest rates to increase, according to the central bank.