OTTAWA—The Bank of Canada has raised its overnight policy rate by 25 basis points to 2.5 percent, warning that elevated energy prices could push inflation higher and necessitate further rate increases.
“The outlook for inflation has deteriorated. With the war in the Middle East persisting, global oil prices have increased, and are expected to remain higher for longer,” Bank of Canada Governor Tiff Macklem told reporters on Oct. 28.
Macklem said the Bank decided to increase interest rates because the war between the United States and Iran has persisted, leading to higher oil prices that are expected to bleed into broader prices for goods….