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It’s getting more expensive to borrow money.
Citing what it calls “persistent inflation,” the Bank of Canada increased its key lending rate from 2.25% to 2.5%, the first increase since 2023.
Canada’s annual rate of inflation topped 3 percent last month due mostly to rising energy costs fuelled by the Middle East war.
In its monetary policy statement, the central bank noted the tightening of credit is needed to blunt the risk of higher energy prices affecting other areas of the economy.
Central Bank governor Tiff Macklem says policymakers believe raising interest rates now will help rein in inflation sooner, noting interest rates are still low enough to not put a drag on the broader economy.
Written by: John Brenner
