The Bank of Canada increased its overnight-rate target by 25 basis points to 2.5 percent on October 28. It set the Bank Rate at 2.75 percent and the deposit rate at 2.45 percent, tightening policy amid a more persistent inflation outlook.

The bank said elevated oil prices have kept consumer inflation near 3 percent since April. It expects inflation to rise to about 3.5 percent by year-end. Higher production and transportation costs, together with rising imported input prices, are adding pressure on businesses.

Its forecast puts Canadian growth at 1 percent in 2026 and 2 percent in both 2027 and 2028. New U.S. tariffs are expected to slow growth late this year, while investment, exports and fiscal measures support a subsequent recovery. These remain projections subject to substantial trade uncertainty.

Governing Council indicated further increases could be needed but emphasized caution. It projects inflation averaging 3 percent in 2027 before returning to 2 percent around mid-2028. The next scheduled rate announcement is December 9.