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The Bank of Canada raised interest rates for the first time since 2010, citing a recent acceleration of growth that it predicts will eliminate fully the economy’s economic slack by the end of this year.

The central bank’s benchmark rate was raised to 0.75 per cent, from 0.5 per cent, at a rate decision Wednesday. It said future rate moves will be “guided” by the data, while downplaying recent sluggishness in inflation.

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With the hike, Canada becomes the first Group of Seven country to join the U.S. in raising interest rates on Wednesday, potentially fueling speculation the world’s central bankers are heading into a tightening cycle.

Key Points

— The Bank of Canada said recent data has increased its “confidence” the economy will continue to grow above potential, meaning excess capacity is being absorbed. The central bank estimates the economy will return to full capacity by the end of 2017. In April, it had predicted the closing of the output gap in the first half of 2018. The bank estimates the degree of excess capacity in the second quarter of this year is between zero and 1 per cent of GDP

— The central bank downplayed recent weakness in inflation, judging the sluggishness as “mostly temporary.” It predicted inflation will return “close to” its target of 2 per cent by the middle of 2018 — which is later than it had predicted in

April. It gave a nod to the sluggishness by saying the overnight rate will be guided by its inflation outlook

— There was no reference to the 2015 rate cuts. One of the big questions investors had ahead of the rate decision was whether the central bank’s focus was the 50 basis points of cuts implemented in 2015. Just last month, Governor Stephen Poloz said that what the recovery “suggests to us is that the interest rate cuts that we put in place in 2015 have largely done their work.” The statement did say the adjustment to lower oil prices is largely complete