Bank of Canada Raises Rates to 2.50%, With January Hike Expected After December Pause, CIBC Says

10:38 AM EDT, 10/28/2026 (MT Newswires) -- The Bank of Canada raised its overnight rate by 25 basis points to 2.50% on Wednesday, in line with expectations, as it sought to prevent higher energy prices from feeding into broader inflation, according to CIBC Economics in a note. Although core inflation remains close to 2% annually, Canada's central bank warned that rising inflation expectations and producer prices could drive further price increases in the months ahead, wrote CIBC in the note. The BoC's latest Monetary Policy Report expects inflation to remain at 2.6% by the end of 2027, even as energy prices slightly reduce inflation, said the bank. The economy is also expected to remain below its full potential, while new US tariffs are forecast to slow annualized growth to 0.8% in the fourth quarter. The Bank said further rate hikes may be needed but stressed it would proceed "carefully" given ongoing economic uncertainty. CIBC expects rates to remain unchanged at the December policy meeting, followed by another increase in January 2027.