The Bank of Canada raised its key interest rate once again by one-quarter of a percentage point to 4.25%, but signalled that its recent string of rate hikes may be at an end.

The increase to the overnight rate — what major banks charge each other for overnight loans — is the seventh increase since last fall, when the Bank of Canada started edging rates up gently to slow down a red-hot economy and keep inflation in check.

In a commentary accompanying today’s rate decision, the Bank of Canada dropped any suggestion that modest further rate hikes may be necessary to keep the economy rolling and inflation in check — a phrase that had been common in previous announcements.

Instead, the bank said the overnight rate is now at a level that is expected to keep the Canadian economy healthy and to return inflation to the bank’s 2% target.

“With today’s increase, the target for the overnight rate is now at a level that is expected to keep the Canadian economy on the base-case path projected” in their recent economic reports, central bankers said in a statement.

BMO Nesbitt Burns senior economist Michael Gregory said the Bank of Canada appears to have “officially” paused but still probably retains a bias to tighten.

“The data, inevitably, will determine the length of pause and the post-pause policy direction,” he said.


The country’s major banks responded by boosting their prime rate, which is what they charge top customers.