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Bank of Canada raises 25 bps.

Bank of Canada raises benchmark lending rate 25 basis points

Paul Vieira, Financial Post Published: Tuesday, June 01, 2010

OTTAWA -- For the first time in nearly three years, the Bank of Canada on Tuesday hiked its key interest rate, by 25 basis points to 0.50%, as the domestic economy rebounds strongly against the backdrop of an "uneven" global recovery.

However, it signaled in its accompanying statement there is "considerable uncertainty" in the economic outlook given fiscal and financial unrest in Europe. As a result, further rate hikes "have to be weighed carefully" against global and domestic developments.

"This decision still leaves considerable monetary stimulus in place, consistent with achieving the 2% inflation target in light of the significant excess supply in Canada, the strength of domestic spending and the uneven global recovery," the central bank, led by governor Mark Carney, said.

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