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Bank of Canada Raises Rates But Cautions Stimulus Still Needed

  • Policy makers increase benchmark interest rate to 1.25 percent
  • Central bank says accommodation needed to remain at target
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Bank of Canada Governor Stephen Poloz discusses the state of Nafta negotiations and the Canadian economy.(Source: Bloomberg)
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The Bank of Canada indicated it’s in no rush to pursue aggressive interest rate hikes, citing “important unknowns” such as the future of Nafta as it raised borrowing costs for the third time since July.

At a rate decision Wednesday, central bank officials led by Governor Stephen Poloz sought to quell expectations Canada’s economic boom could prompt them to move quickly with additional hikes, downplaying any worries about the economy overheating and inflation rising above target.