Canadians with mortgages, lines of credit and other variable-rate loans could soon face higher borrowing costs.
The Bank of Canada is widely expected to increase its benchmark interest rate by a quarter point Wednesday, marking the first hike since July 2023 and ending a pause that has lasted nearly a year.
Financial markets and economists surveyed by Reuters are forecasting the central bank will lift its policy rate from 2.25 per cent, where it has remained for almost 12 months.
Inflation concerns are back in focus
The anticipated move comes as the Bank of Canada faces competing economic pressures.
A tariff dispute with the United States continues to pose risks for economic growth, but policymakers have increasingly signalled concerns about inflation stemming from conflict in the Middle East and its impact on energy prices.
While the central bank has indicated it would look beyond the initial inflation spike caused by higher fuel costs, officials have also suggested they could raise interest rates if those price increases begin spreading more broadly throughout the economy.
Updated economic forecasts also expected
Alongside its interest rate announcement, the Bank of Canada will release updated forecasts for inflation and economic growth.
Those projections are expected to offer fresh insight into how policymakers view the balance between supporting economic activity and keeping inflation under control in the months ahead.
For homeowners, businesses and anyone carrying variable-rate debt, today's announcement could provide an early indication of whether borrowing costs are headed higher after a lengthy period of stability.
