The Bank of Canada has hiked its overnight target rate by 25 basis points to 4.75%.

The move was partially expected by markets and marks the Bank’s first rate hike since January.

In its statement, the Bank said that with consumption growth “surprisingly strong” and an uptick in inflation in April, it determined that “monetary policy was not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the 2% target.”

The Bank said it will “continue to assess the dynamics of core inflation and the outlook for CPI inflation.”

It noted that “concerns have increased” that inflation could remain persistently higher than that level, although its expectation that it will ease to around 3% by mid-summer remains unchanged.

The next rate announcement is scheduled for Wednesday, July 12.

Source: MPC, CMP Mag