The Bank of Canada raised its benchmark interest rate by 0.25 percentage points on Wednesday, bringing it to 2.5 per cent from 2.25 per cent. The decision marks the central bank’s first rate adjustment in a year and its first increase in three years.
The benchmark had remained at 2.25 per cent since October 2025, when the bank reduced it from 2.5 per cent. Wednesday’s increase returns the rate to its level before that reduction.
The decision comes amid inflationary pressures associated with higher oil and gas prices. The war in Iran and other geopolitical conflicts have contributed to rising energy costs, with potential effects on transportation, production and the prices of other goods and services.
The central bank’s benchmark rate influences borrowing costs across the Canadian economy. Changes can affect rates offered by financial institutions on variable-rate mortgages, lines of credit and other loans. The impact on individual borrowers depends on their lender and the terms of their agreement.
