Inflation rate: Bank of Canada raises key interest rate to tame inflation

The Bank of Canada raised its key interest rate by half a percentage point to 1.5% on Wednesday, the second increase in as many months

The central bank is trying to rein in inflation, which is running at a three-decade high of 6.8%.

The Bank of Canada said it expects inflation to remain elevated in the near term, but to ease back to the 2% target by the end of 2023.

The Bank of Canada's decision comes as central banks around the world are raising interest rates to fight inflation

The U.S. Federal Reserve raised its key interest rate by a quarter-point last month, and the European Central Bank is expected to raise rates later this year.

Higher interest rates make it more expensive for businesses and consumers to borrow money, which can slow economic growth.

The Bank of Canada's decision is likely to have a modest impact on the Canadian economy

The central bank said it expects economic growth to moderate to 3.5% this year, down from 4.6% in 2021.

The Bank of Canada also said it is prepared to raise interest rates further if necessary to bring inflation back to target.