Bank of Canada raises interest rates to 16-year peak

The Bank of Canada has raised interest rates to the highest since 2007 but signalled a pause in its monetary policy tightening amid a slowing economy.

The central bank lifted its key interest rate by 25 basis points to 4.5pc.

It marks the eight increase in less than a year as policymakers try to tame surging inflation though the 25 bp rise was the smallest since March.

The bank said it expects to hold interest rates at that level while it assesses the impact of higher borrowing costs. It said while job markets were “still tight”, it had seen “growing evidence that restrictive monetary policy is slowing activity, especially household spending”. It projected GDP growth of about 1pc in 2023 and about 2pc in 2024.