The Bank of Canada (BoC) raised its key interest rate by 25 basis points to 2.5% for the first time in over three years, warning of potential further hikes to curb inflation. The BoC revised its 2027 inflation forecast from 2% in July to 3.1% and expects 1% economic growth this year. Governor Tiff Macklem stated that given the significant rise in the inflation outlook and the economy's resilience, it was necessary to increase the policy rate to reduce the risk of rising energy prices spilling over and becoming broad-based inflation. He added that further increases in the policy rate might be needed, but the bank would proceed cautiously given the uncertainties. This rate hike is the first since July 2023.