Bank of Canada Governor leaves open possibility of further rate hikes

Bank of Canada Governor Tiff Macklem said on Tuesday that the central bank may need to raise its policy rate further, citing the risk that higher energy prices from the Middle East conflict could spill over into broader inflation. The BoC raised its benchmark rate by 25 basis points to 2.5% on October 28, its first hike since July 2023. Macklem told the House of Commons finance committee the bank will watch how long energy prices stay elevated and how far they pass through to other prices, and will respond cautiously given the uncertainty. The signal keeps a possible further hike on the table and matters for Canadian rate expectations and the loonie. Investors will watch upcoming inflation prints and energy prices for direction ahead of the next rate decision.