The Bank of Canada has raised its benchmark lending rate by 25 basis points to 2.5%, as the Canadian economy continues to perform well. Central Bank officials have credited high commodity/energy prices as a key driver of economic growth. Because Canada runs a surplus in international energy trading, the economic impact of higher energy prices has more than offset any potential inflationary consequences. Moreover, the Central Bank noted growth and inflation expectations remain high and low, respectively, for the rest of the year, signaling the possibility of future rate increases. This latest move by the Central Bank will likely provide further impetus for foreign investors, who have already moved capital en masse into Canada. The Globe and Mail reports:

“What happens going forward remains a little uncertain,” amid higher energy prices, a strengthening Canadian dollar and a cloudy outlook for the U.S. economy,

Read More: BoC raises rate to 2.75%