In an unexpected move, the Bank of Canada, in its meeting moments before, raised the interest rate by 100 basis points to 2.50% from 1.50%, while expectations were to raise it by about 75 basis points to reach 2.25%.

Inflation in Canada is higher and more stable than the bank forecast in its April monetary policy report and is expected to remain around 8% in the next few months as the turmoil continues from the Ukraine war and the supply chain crisis, the bank’s interest report said.

The bank expects the Canadian economy to grow by 4% in the second quarter and is expected to slow to 2% in the third quarter, with growth expected to reach 3.5% in 2022.

The Board believes that it will continue to tighten monetary policy and further raise interest rates with the rise in inflation and the expansion of its scope, and that the process will be carried out by the bank’s continuous assessment of the economy and inflation until the bank’s target of 2% inflation is achieved.

The Canadian dollar is trading at 1.2987, rising since the announcement of the statement against the US dollar, as the markets were anticipating a rise of less than 100 basis points in today’s meeting.