Bank of Canada Expected to Raise Rates 25 Basis Points Wednesday to Contain Energy-Led Inflation

The Bank of Canada is expected to raise its benchmark overnight rate by 25 basis points on Wednesday to 2.50%, according to money markets and a Reuters poll, as a pre-emptive move to prevent energy-driven inflation from spreading into food and housing costs. It would be the first hike since July 2023 and the first policy rate change in a year. Annual inflation rose to 3.1% in September, driven almost entirely by energy, while core measures eased below 2%, the midpoint of the bank's 1% to 3% target range. Nineteen of 34 economists surveyed Oct. 21-23 forecast the quarter-point increase, with a majority expecting one more rise before March. BoC Governor Tiff Macklem signaled readiness to act if inflation stays high, and BMO chief economist Doug Porter said concerns have "gone beyond the comfort zone" for the bank. The decision is due Wednesday at 9:45 a.m. ET, alongside the quarterly Monetary Policy Report. The Federal Reserve also announces its decision Wednesday and is widely expected to hold rates.