As the Bank of Canada once again hiked interest rates in its fight to tame inflation, it remains unclear when a future pause might come.

On Wednesday, the bank hiked the overnight interest rate by 25 basis points, bringing it to 5.00 per cent, while also extending the projected timeline to bring Canada’s inflation rate down to the two per cent target into the middle of 2025.

“Even as headline inflation has come down largely as we forecast, underlying inflationary pressures are proving more persistent than we expected,” Bank of Canada Governor Tiff Macklem said in prepared remarks on Wednesday. “Higher interest rates are needed to slow the growth of demand in the economy and relieve price pressures.”

Wednesday’s hike marks the 10th increase since the bank began this tightening cycle back in March 2022. Macklem told reporters the central bank will be taking each future rate announcement “one at a time.”

“We think we’re close, but what I would highlight is there are a certain number of things that have to happen, for that forecast to be realized,” he said.

For the bank to achieve its goal, Macklem said the rate hikes need to have the desired outcome and progress in dropping inflation needs to avoid stalling.

“We know that our past interest rate increases are feeding through, they’re having an impact and there’s more to come, but what the total impact of those interest rates is ultimately is uncertain,” he said.

“It’s clearly too early to talk about interest rate cuts. We are certainly trying to balance the risks of over and under tightening and we’ll be taking it one meeting at a time.”

Meanwhile, Robert Kavcic, senior economist at BMO Capital Markets, believes the Bank of Canada could pause rates in the near term.   

“I think policy today is restrictive enough and I think they sense that,” he told BNN Bloomberg. “It doesn’t necessarily mean 100 per cent done. If we continue to see data like we saw this spring they very well could come off and move again, but I think at this point we are restrictive enough.”