Tiff Macklem defends Bank of Canada’s decision to raise rates to 2.5%.

The governor of the Bank of Canada took questions after the central bank announced an interest rate increase, putting the focus on the reasons behind the move and what it could mean for Canadians.

The rate hike marked the central bank’s latest action on borrowing costs, a decision closely watched by households, businesses and financial markets. Changes to the policy rate can affect mortgage payments, consumer loans, savings rates and wider economic confidence.

In the question-and-answer session, Macklem addressed the decision in the context of the bank’s responsibility for monetary policy. Such appearances are an important part of explaining how the central bank views inflation, growth and the risks facing the economy.

The increase is significant because higher interest rates generally make borrowing more expensive, which can slow spending and investment. At the same time, central banks use rate rises as a tool when they judge that price pressures need to be contained.

The governor’s remarks were expected to be scrutinised for signals about whether further moves could follow, as well as for the bank’s assessment of how Canadians are responding to higher borrowing costs.