The Bank of Canada is raising its benchmark interest rate from 1.25 to 1.5 per cent.
It’s the first hike in six months.
The central bank predicts the economy will remain resilient even as it faces an even bigger bite from deepening trade tension
It says persistent trade uncertainty and Canada’s tariff fight with the United States will shave nearly 0.7 per cent from economic growth by the end of 2020 , but it predicts the blow to be largely offset by the positive impact of higher oil prices.
The Bank of Canada is also releasing its quarterly update of projections, which predicts slightly stronger growth in both 2019 and 2020, compared with its outlook in April.
The bank also says it expects higher interest rates will be necessary over time to keep inflation near its target.