Canada’s Inflation Rises to 3.1%, Raising Prospects of Interest Rate Hike by Year-End

Economists believe the Bank of Canada could raise interest rates by the end of 2026 following the release of the country’s September inflation figures.

According to Statistics Canada, the annual inflation rate climbed to 3.1 per cent, driven by higher oil and gas prices, moving above the Bank of Canada’s target range of 1 to 3 per cent. However, underlying inflation has eased, offering some relief to the central bank.

Ongoing trade tensions with the United States and the crisis in the Middle East could put further upward pressure on inflation.

According to KPMG Canada, the Bank of Canada is expected to keep interest rates unchanged at its late-October meeting, with a possible hike by December.

The central bank has kept its benchmark interest rate steady at 2.25 per cent for the past seven consecutive policy meetings.