Bank of Canada won't rule out higher rates amid rising geopolitical risks

are working to bring down inflation, but with new geopolitical unrest in the Middle East and core inflation proving “sticky,” he did not rule out further rate hikes.“The fight against inflation is not over,” Macklem said from Marrakesh, Morocco, where he is convening with international counterparts atMacklem said he believes Canada can return to the central bank’s target inflation of two per cent without triggering a major economic slowdown.

He said factors such as surging long-term bond yields — which make borrowing more expensive and could cool demand without central banks needing to increase the overnight rate — will be weighed when the central bank makes its next rate decision later this month.He added that long-term bond trends have to be weighed against other factors such as the strength of economy and labour market.

The central bank left the overnight interest rate unchanged at five per cent at its last rate-setting announcement Sept. 6, but a further rate increase was considered during deliberations for that decision as core inflation remained stubbornly high.

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