Bank of Canada raises interest rate to 0.5% in first hike since 2018

By Ovunc Kutlu

ANKARA (AA) - The Bank of Canada said Wednesday it increased its target for the overnight rate by 25 basis points to 0.5%.

The expected move marks the first rate hike by the central bank since 2018.

While the bank rate was raised to 0.75%, the deposit rate was increased to 0.5%.

The Bank of Canada said the Russian attack on Ukraine is "a major new source of uncertainty."

"Prices for oil and other commodities have risen sharply. This will add to inflation around the world, and negative impacts on confidence and new supply disruptions could weigh on global growth," it said in a statement.

"Financial market volatility has increased. The situation remains fluid and we are following events closely," it added.

The bank stressed that the Russian incursion is putting larger upward pressure on prices for energy and food-related commodities.

It noted that inflation in Canada is now expected to be higher in the near term, compared to projections in January.