The Bank of Canada has today hiked its benchmark overnight interest rate by 50 basis points to the highest level in almost 15 years and signaled its historic tightening campaign was near an end.
The central bank has raised rates at a record pace of 400 basis points in nine months to 4.25%, a level last seen in January 2008.
The bank cited still-strong growth and tight labour markets as the reason for the latest increase.
But it eliminated the forward guidance it has used since it began cranking rates higher in March, dropping language that said they would have to rise further.
"Looking ahead, Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target," the bank said in a statement.
Money markets had bet on a 25-basis-point increase, but a slim majority of economists in a Reuters poll expected a 50-bps move.
Gross domestic product growth in the third quarter, which grew at an annualised 2.9%, was stronger than expected and there is still "excess demand" in the economy, while labour markets remained tight, it said.
Overall, however, the central bank said that data supported its October forecast that growth would stall through the middle of next year.
Inflation, clocked at 6.9% in October, "is still too high", but three-month rates of change in core inflation have declined and indicate "prices pressures may be losing momentum", the bank said.
If the bank's tightening campaign overshoots, it could trigger a deeper downturn than expected, something that the bond market is now signaling is a risk.
