The Bank of Canada has bumped its key interest rate to five per cent, up 25 basis points.

Officials said Wednesday that the country’s inflation rate slowed to 3.4 per cent in May.

But the economy has continued to be much stronger than what was expected, they said.

With the higher interest rates, the bank expects economic growth to slow over the coming months.

However, they cautioned that it could now be mid-2025 before inflation returns to its two per cent target.

That is several months slower than what the central bank was forecasting earlier this year.

More to come.