The Bank of Canada increased its target for the overnight rate to 1.5 per cent this morning.

The BOC said in its news release that the central bank rate is being adjusted to combat inflation with continues to rise globally and in Canada largely driven by higher prices for energy and food.

In Canada, in April the inflation rate reached 6.8 percent which was well above the Bank of Canada’s forecast and it expects the inflation rate will move even higher.

As well almost 70 per cent of the categories identified in the inflation rate now show inflation above three per cent.

The BOC says the Russian invasion of Ukraine, China’s COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation and that the increase in global inflation is occurring as the global economy slows down.