The Bank of Canada today announced that it is raising its target for the overnight rate by 25 basis points to 3.75%. The decision was widely expected by market watchers.

The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 4%.

This was the fifth consecutive time that the bank has raised rates since the low of 2% in mid-2004.

In its statement, the bank said “Information on the Canadian and global economies received since the January Monetary Policy Report Update has been broadly in line with the Bank’s expectations, although the Canadian dollar has recently moved above the range that had been assumed in the Update.”

The bank warned that it may raise interest rates again at its next rate-setting meeting on April 25 to try to keep supply and demand in balance and inflation on target over the medium term.

Following the central bank’s announcement, the chartered banks started raising their own rates a few minutes after the announcement by the central bank. CIBC, RBC Royal Bank, Scotia Bank, BMO and TD Canada Trust all raised their prime lending rate by one-quarter of a point to 5.5%. The other chartered banks are expected to follow.