The Bank of Canada has hiked its benchmark interest rate to 0.75 per cent from 0.5 per cent, its first increase in nearly seven years.
Such a move will increase the costs of mortgages, home equity lines of credit and other loans linked to the big bank prime rates.
The announcement comes following a series of data suggesting the economy started the year on a strong footing, even as inflation has remained below the Bank of Canada's target of two per cent.
The central bank last raised its key interest rate target in September 2010.