Ontario Premier Doug Ford blasts Bank of Canada interest rate hike

The Bank of Canada raised its key policy rate by 25 basis points to 2.5 per cent on Wednesday, its first increase since July 2023. The move was widely expected amid high oil prices and rising interest rates, both partly linked to the war in Iran and U.S. President Donald Trump’s trade war. Before the announcement, Ontario Premier Doug Ford wrote in a post that higher rates would not get oil moving through the Strait of Hormuz or lower tariffs on Canadian businesses. He said they would make life more expensive for Canadian families and workers, punishing them for something they cannot control, and called the hike “a massive mistake.”

The bank raised its 2027 inflation forecast to 3.1 per cent from the 2 per cent forecast in July. It expects the Canadian economy to grow by 1 per cent in 2026 and 2 per cent in 2027, a “somewhat” stronger overall outlook than it projected in the summer. The bank said it raised rates to reduce the risk that persistently high energy prices spread to the prices of other goods and services. Officials said another increase may be needed, but the Governing Council agreed to proceed carefully given the uncertainty.

Ontario Finance Minister Peter Bethlenfalvy, who is set to deliver the province’s fall economic statement on Thursday, had a more measured reaction to the expected increase and said he understood Ford’s perspective. Speaking to CTV News at an unrelated news conference before the rate decision was official, he said people feeling the effects of higher rates would naturally want lower ones. He added that the Bank of Canada is an independent organization with all the facts at its disposal, and that keeping inflation in check is important.

The Bank of Canada explains that an economy growing too quickly can lead to rising inflation. Higher rates mean people and businesses pay more interest on loans and mortgages, discouraging borrowing and reducing spending, which puts the brakes on inflation. The bank says people tend to save more and spend less when rates are higher, slowing the economy. Before Wednesday’s increase, the bank last changed its rate on Oct. 29, 2025, when it cut by 25 basis points.