The Bank of Canada on Wednesday hiked interest rates by a quarter of a percentage point, resuming tightening after a four-month pause. The bank lifted its overnight rate to 4.75% from 4.5%, noting that while consumer price inflation is coming down around the glob, largely reflecting lower energy prices compared to a year ago, “underlying inflation remains stubbornly high.” Canadian consumer inflation ticked up to 4.4% in April, the first rise in 10 months. “Based on the accumulation of evidence, Governing Council decided to increase the policy interest rate, reflecting our view that monetary policy was not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the 2% target,” the BOC said, in a statement. The U.S. dollar fell 0.4% versus its Canadian counterpart USDCAD to fetch C$1.3348.
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