Bank of Canada Raises Rate for First Time in More Than Three Years

The Bank of Canada raised its policy rate by 25 basis points to 2.50% on Wednesday, its first increase in more than three years and a monetary shift for crypto traders to track.

The bank expects inflation to remain significantly above its 2% target through 2028. It signaled another increase may be needed to limit the risk that high energy costs spread into broad-based inflation. Officials said they would adjust policy cautiously. The bank also cited elevated uncertainty tied to U.S.-Canada trade tensions and the conflict in the Middle East.

The central bank raised its economic growth outlook, pointing to consumer spending and exports, while expecting business investment to recover. It said wider corporate use of artificial intelligence and tax deductions introduced by Prime Minister Carney could support investment. The hike reverses the easing cycle that began in June 2024.