Bank of Canada Raises Interest Rate for First Time Since 2023 to Combat Energy-Driven Inflation Faced with surging global energy prices and the potential for widespread cost increases, the Bank of Canada has raised its policy rate from 0.25% to 0.50% - the first hike since December 2023. Governor Tiff Macklem stated the move is essential to mitigate the risk of energy shock-induced inflation spilling into other sectors, despite acknowledging the potential impact on consumer and business borrowing costs. The Bank of Canada has raised its benchmark interest rate for the first time in over three years, increasing it from 0.25% to 0.50%. This decision, made on Wednesday, is aimed at preemptively combating inflation driven by rising global energy prices. While the Canadian economy has shown resilience, the central bank is concerned that higher oil prices will lead to broader cost increases and inflationary pressures. Although the rate hike may dampen near-term growth, the bank believes it is necessary to stabilize inflation around the 2% target.