Canada's Central Bank hikes key interest rate to one percent

The Bank of Canada raised its key interest rate by one-quarter percentage point to one percent on Wednesday, the third bump in as many months.

The rate hike was largely expected, after the central bank began raising rates in June from a historic low amid signs of an economic rebound.

As the economy now appears to be recovering more slowly than expected, the central bank hinted it would hold back on further rate hikes in the near term.

The global economic recovery "remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies," the bank said in a statement.

In Canada, economic activity in the second quarter was "slightly softer" than the central bank had expected, it said.

Going forward, growth in consumer spending is expected to "remain solid" and business investment to "rise strongly."

"The bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July monetary policy report, largely reflecting a weaker profile for US activity."

With inflation on target, and financial conditions in Canada modestly tightened but still "exceptionally stimulative," the Bank of Canada said any further rate reduction "would need to be carefully considered in light of the unusual uncertainty surrounding the outlook."

Canada was the first G7 nation to increase lending rates after the global economic crisis of 2008, after having lowered its key lending rate rapidly through 2008 and early 2009 to its "lowest possible level."

AFP