UPDATE 1-Canada hikes interest rate to 4.25%

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UPDATE 1-Canada hikes interest rate to 4.25%

OTTAWA, Dec 7, Reuters - The Bank of Canada hiked its benchmark overnight interest rate by 50 basis points to 4.25%, the highest level in almost 15 years, signalling the tightening campaign is near an end.

The central bank has raised rates at a record pace of 400 basis points in the last nine months, citing strong growth and tight labor markets as the reason for the latest increase.

It removed the forward guidance it had been using since the beginning of the tightening cycle, dropping language that said rates would have to rise further.

The Governing Council will be looking at whether or not the policy interest rate needs to increase to bring supply and demand back into balance and return inflation to target, the bank said in a statement.