The Financial Post reports in its Thursday, Oct. 29, edition that the Bank of Canada raised its benchmark lending rate by 25 basis points to 2.5 per cent, with at least one more hike expected, according to economists. The Post's Gigi Suhanic writes that following this announcement, investors reduced their December rate hike bets to 55 per cent from 100 per cent. CIBC economist Andrew Grantham says the BOC hiked rates "as it looks to guard against the threat of elevated energy prices becoming a widespread inflationary problem." CIBC is calling for the BOC to skip a December rate hike, but raise it in January and then hold it at 2.75 per cent, the midpoint of its neutral range of 2.25 per cent to 3.25 per cent. Desjardins Group economist Royce Mendes says, "Those relying on backward-looking data and outdated models of inflation will no doubt say this rate hike is a mistake." He says, "In reality, central bankers made a tough, forward-looking decision that reduces the risk of a painfully aggressive tightening cycle down the road." The BOC is forecasting headline inflation of 3.4 per cent in the fourth quarter and 2.6 per cent in the same period next year, "up significantly" from previous forecasts.