Bank Of Canada Raises Interest Rates

The Bank of Canada raised interest rates on Wednesday, while at the same time warning that stimulus is still needed to sustain growth.

The committee led by Stephen Poloz increased interest rates to 1.25 percent, the highest level since the global economic recession.

While the move is in line with the recent economic expansion that saw jobless rate dipped to the lowest in more than four decades, the uncertainty surrounding the North American Free Trade Agreement remains a concern going forward.

“Uncertainty surrounding the future of the North American Free Trade Agreement is clouding the economic outlook,” the central bank said.

Therefore, the bank warned the economy needs some monetary accommodation to sustain growth and keep inflation on target.

“While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target,” the Bank of Canada said Wednesday in a statement from Ottawa. “Governing Council will remain cautious in considering future policy adjustments.”

Also, the central bank raised its growth forecast to 1.6 percent, citing strong demand and increased economic activities.

The Canadian dollar sustained its gain against the U.S. dollar, gaining 0.24 percent to C$1.2405.