OTTAWA, Oct 24 (Reuters) - The Bank of Canada on Wednesday raised interest rates as expected and said more hikes would be needed to keep inflation in check, while also hailing a new North American trade pact it forecast would reduce economic uncertainty.
The central bank - which has now lifted rates five times since July 2017 as the economy strengthens - tweaked its standard language on future hikes, dropping previous references to the gradual pace of tightening.
“In determining the appropriate pace of rate increases, Governing Council will continue to take into account how the economy is adjusting to higher interest rates, given the elevated level of household debt,” it said.
Trade uncertainty in North America, which the bank had previously flagged as a major risk to the economic outlook, would diminish after the United States, Canada and Mexico agreed a new continental trade agreement on Sept. 30, it said.
The bank, noting the U.S. economy was “especially robust”, boosted its estimate of third quarter annualized growth to 1.8 percent from 1.5 percent. Growth in the fourth quarter should jump to 2.3 percent, it added.