OTTAWA – The Bank of Canada’s governing council thinks it might need to raise interest rates further but it’s proceeding carefully, according to a summary of deliberations of its recent decision to raise its key policy rate for the first time since 2023.
According to the report released Tuesday, the council acknowledged it faced considerable uncertainty and said it would take its monetary policy decisions one meeting at a time.
“Members underlined that their outlook was still subject to considerable uncertainty about the war in the Middle East, Canada‑U.S. trade relations, global financial conditions, the speed and extent of pass‑through and how businesses and households would react to these developments,” the summary said of the governing council.
“They agreed they would need to continue to take these sources of uncertainty into account when setting monetary policy.”
The Bank of Canada raised its policy interest rate by a quarter of a percentage point to 2.5 per cent last month to reduce the risk that stubbornly high oil prices become persistent inflation.
The central bank has said since the war in the Middle East began that it would “look through” the direct and immediate impact on inflation, but it would not let higher energy prices turn into broad-based and persistent inflation.
“With the war in its eighth month and no resolution on the horizon, members exchanged views on whether a higher policy interest rate was needed to mitigate the risk that higher energy costs would spread to other goods and services,” the summary of deliberations said.
The report said the council members agreed that monetary policy cannot lower global energy prices, but can prevent them from leading to generalized inflation.
The decision came as the Bank of Canada raised its outlook for the annual inflation rate to hit 3.5 per cent at the end of this year and remain above three per cent for much of 2027.
The summary of deliberations said higher costs largely haven’t been passed through to consumers so far, but the bank’s surveys suggest businesses expect to raise some prices over the next year.
The Bank of Canada’s next scheduled interest rate decision is set for Dec. 9.
This report by The Canadian Press was first published Nov. 10, 2026.
