OTTAWA, June 4: The Bank of Canada raised interest rates on Tuesday for the second time in less than two months to cool a sizzling economy, and hinted strongly that further rate hikes were on the way.

“Today’s interest rate increase represents a further reduction in the substantial amount of monetary stimulus in the economy,” the central bank said in a statement announcing the move, which brought the overnight rate to 2.5 per cent from 2.25 per cent and the bank rate to 2.75 per cent from 2.5 per cent.

Canada’s overnight rate is now 75 basis points higher than the equivalent Fed funds rate in the United States, widening an interest rate gap that has already supported the Canadian dollar against the greenback over the last few weeks.

The bank said April’s core inflation of 2.2 per cent was slightly above projected levels. The central bank aims to keep total inflation at the centre of a 1-3 per cent target range.—Reuters