Canada is first G7 state to hike rates

THE Bank of Canada has become the first G7 central bank to hike interest rates at its monthly meeting.

It hiked the cost of borrowing by 25 basis points to 0.5 per cent at its monthly meeting yesterday.

But analysts said that the tone of the accompanying statement suggested this could be a one-off hike.

The Bank of Canada’s statement concluded: “Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.”

Paul Ashworth at Capital Economics said, “The strength of Canada’s domestic economy meant that the Bank of Canada simply couldn’t hold off any longer.”