The Bank of Canada is expected to raise interest rates as surging oil prices, reaching $115 per barrel, intensify inflation concerns. The central bank’s policy rate currently stands at 2.25%, while inflation has risen to 3.1%, driven primarily by a significant increase in gasoline prices. Markets see an 84% probability of a 25-basis-point rate hike at the upcoming October announcement, with a 50-basis-point increase still under consideration. Governor Tiff Macklem has said the bank is prepared to raise rates if necessary to combat inflationary pressures, as core inflation data, global oil price trends and the Federal Reserve’s actions are closely monitored.
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