The Bank of Canada raised its key interest rate by a quarter percentage point this morning, bringing it to 5%, the highest rate since 2001.
Analysts widely expected the move as the economy has not cooled as much as forecasted.
Bank of Canada Governor Tiff Macklem explained why another interest rate hike is necessary despite inflation easing.
Updated economic projections from the Central Bank suggest that it will take longer to achieve the 2% inflation target.
The Bank now expects inflation to hover around 3% for the next year before gradually declining to 2% by mid-2025.
The central bank did not indicate whether it plans to raise rates again in September and instead stated that its governing council will continue to monitor how the economy evolves.