The Bank of Canada ended its interest rate pause on Wednesday as it looks to stamp out inflation and cool the country’s red-hot economy.
The central bank raised its benchmark interest rate to 4.75 per cent, an increase of a quarter-percentage point in its first hike since January.
The policy rate, which sets the cost of borrowing in Canada, now stands at its highest level since May 2001. The Bank said in a statement accompanying the decision that policymakers felt the previous rate of 4.5 per cent was “not sufficiently restrictive” to bring inflation back down to its two per cent target.
The return to rate hikes comes after two consecutive decisions in March and April when the Bank left its key rate unchanged.