Bank of Canada Raises Rates 25 Basis Points to 2.5%; TSX Slips as Energy Stocks Outperform

The Bank of Canada raised its overnight rate target by 25 basis points to 2.5% on Wednesday, ending a streak of seven consecutive holds. The Bank Rate stands at 2.75% and the deposit rate at 2.45%. The central bank said the hike aims to curb the risk that elevated energy prices spill over into broader goods and services inflation. Energy stocks outperformed on firm crude prices, with Suncor Energy and Cenovus Energy among names up 1.5%-2%. Technology shares advanced, tracking a U.S. tech rally tied to AI optimism, as Celestica rose 4.3%. Materials and real estate lagged. The benchmark S&P/TSX Composite Index was down 43.52 points at 36,127.97 shortly before midday. The BoC said further increases may be needed but pledged to proceed carefully amid elevated uncertainty, and projected growth to slow in the fourth quarter of 2026 due to new U.S. tariffs before recovering in 2027.