The Bank of Canada increased the overnight rate today to 4.75% citing persistent inflation at 4.4%, a hot job market and stronger than expected economy. 

By raising the overnight rate, the expected effect in the coming months is: "In our baseline forecast, the labour market will soften as the economy slows. Wage growth will ease. Businesses will revert to more normal price-setting behaviour. And near-term inflation expectations will come into line with the inflation target," said Bank of Canada Governor Tiff Macklem recently.  

With inflation at twice the Bank of Canada's target rate of 2%, housing-market activity that has dramatically increased this spring fuelling an uptick in home prices and the economy showing no signs of softening could lead to even a further Bank of Canada increase this year. However, most Canadian economists believe the Bank of Canada will leave its key interest rate at 4.75% for the duration of 2023 even though the Bank of Canada left the door open to more tightening. The next official inflation announcement is scheduled for June 27, 2023.