The Bank of Canada has raised its overnight rate target by 25 basis points to 2.25%.

Analysts were split over whether the bank would see fit to raise rates this early in the recovery or not. The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 2.5%.

In its policy statement, the Bank said, “The accumulated information since the beginning of the year continues to indicate stronger-than-expected economic growth in Canada and the United States. A robust recovery appears to be underway in Canada.”

It also noted that there are, “uncertainties with respect to the continued strength of household spending, the timing and strength of the recovery in business fixed investment, and the implications for the global economy of recent developments in the Middle East.” Nevertheless, the Bank also noted the presence of stronger inflation, observing, “In February, core inflation rose to 2.2%, somewhat above the level projected for the next few months. Total CPI inflation was 1.5%.”

Despite reigning in the money supply a bit, the Bank says, “Substantial monetary stimulus remains in place to support continuing economic growth. This is consistent with keeping inflation at its 2% target over the medium term.”

The Bank’s next scheduled date for announcing policy interest rates is June 4.