Bank of Canada raises the policy rate by 25 basis points to 2½%

The Bank of Canada announced its target for the overnight rate today by increasing it by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.

Despite higher energy prices, global economic activity has remained resilient.

The Bank also revised up global GDP growth slightly to 3.1% in 2026, while growth in 2027 and 2028 remains unchanged from the July projection at 3.2%.

Markets have been volatile due to uncertainty about the outlook for the AI sector. The Canadian dollar had weakened somewhat on US-dollar strength but has since recovered to around 71 cents – the same as assumed in the July Report.

Growth picked up in Canada through the middle of the year.