Bank of Canada Governor Tiff Macklem told members of Parliament on Nov. 3 that last week’s rate increase, to 2.5%, was the first since July 2023. The household stake in his opening statement is how long he expects energy costs to keep inflation up.
He said gasoline, diesel and heating-oil prices are elevated and likely to stay high for longer. Consumer-price inflation has been around 3% since April. The Bank expects it to rise to about 3.5% by year-end, remain at or above 3% through much of 2027, and come close to the 2% target around the middle of 2028. Those figures are the Bank’s forecast, not a household bill already received.
Macklem said firms have mostly absorbed higher input costs so far. Bank surveys and past experience, he said, suggest more of those costs will be passed on over the next year. He left open a further rate increase but said each meeting will be judged on its own. Nothing in the statement resets a fixed-rate loan already signed.
Does about 3.5% by year-end mean Canadian prices already jumped that much? No. It is a forecast for the consumer price index. The completed policy step is a 2.5% target, not a new retail price or a change to an existing fixed payment.