Bank of Canada raises interest rates by 25 basis points

The Bank of Canada hiked interest rates Wednesday by 25 basis points, in line with expectations, as the central bank continues its monetary policy of quantitative tightening.

The target for the overnight rate has been increased to 4.5%, with the bank rate now at 4.75% and the deposit rate climbing to 4.5%.

"Global inflation remains high and broad-based. Inflation is coming down in many countries, largely reflecting lower energy prices as well as improvements in global supply chains," the bank said in a statement.

It added that Beijing lifting coronavirus restrictions has caused an upward revision to China's growth and poses an upside risk to commodity prices, while Russia's war on Ukraine continues to cause significant uncertainty.

The bank lightly revised up its estimates for global economy and now expects it to expand around 3.5% in 2022, but then slow to around 2% in 2023 and 2.5% in 2024.

The Bank of Canada had raised interest rates by 100 basis points last July, its steepest hike since August 1998, in order to fight high inflation. It last made a rate hike of 50 basis points on Dec. 7.

Canada's annual consumer inflation rose 6.3% in December, easing from the 6.8% year-on-year gain in November.