The Bank of Canada has raised its main interest rate by 100 basis points in a bid to crush inflation.
This has surprised markets, making Canada the first G7 country to make such an aggressive hike in the current economic cycle.
The central bank raised its policy rate to 2.5% from 1.5%, its biggest rate increase in 24 years.
Economists and money markets had been expecting a 75-basis point increase.
“We had indicated we were prepared to be more forceful. Today was more forceful,” Governor Macklem told a news conference after the decision.
The central bank’s surprise move lifted the Canadian dollar , which was trading up 0.4% at 1.2975 to the greenback.