Bank of Canada delivers smaller-than-expected rate hike

The Bank of Canada on Wednesday lifted its key overnight lending rate by 50 basis points, or half a percentage point, to 3.75%. Nine of 12 economists surveyed by The Wall Street Journal had penciled in a 75 basis point rise. In a statement, the central bank said it expected inflation to ease “as higher interest rates help rebalance demand and supply, price pressures from global supply disruptions fade, and the past effects of higher commodity prices dissipate.” The bank forecast consumer price inflation to fall to around 3% by the end of 2023 and return to the its 2% target by the end of 2024. The central bank said the policy rate will need to rise further given elevated inflation and inflation expectations. The U.S. dollar USDCAD, -0.43% was down 0.5% at C$1.355 versus the Canadian currency. The U.S. currency was lower across the board versus major rivals on Wednesday.