Bank of Canada lifts rates to 4.75%

The Bank of Canada on Wednesday lifted its benchmark interest rate rate to 4.75% as it battled to stem persistent inflation amid worries that it could get stuck above its 2% target.

The bank had been holding rates steady since January after eight prior rises to the previous level of 4.5%. They are now at their highest level in 22 years.

Strong consumer spending, a rebound in demand for services, a pick-up in housing activity and a tight labor market show excess demand in the economy is more persistent than anticipated, the central bank said in a statement.

Noting an uptick in inflation in April and the fact three-month measures of core inflation had run as high as 4% for several months, the Bank of Canada (BoC) said, "concerns have increased that CPI inflation could get stuck materially above the 2% target".

The BoC said guided for inflation to slow to 3% this summer, but did not repeat comments made in April that it would then retreat to its 2% target by the end of next year.

Reporting by Frank Prenesti for Sharecast.com