The Bank of Canada raised its policy interest rate by 50 basis points on Wednesday as it continues its quantitative tightening to rein in high inflation.

The central bank raised the target for the overnight rate to 1.5%, the bank rate to 1.75% and the deposit rate to 1.5%, it announced in a statement following the decision.

"Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food," the bank said. "The increase in global inflation is occurring as the global economy slows."

"The Russian invasion of Ukraine, China's COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities," it added.

Annual consumer inflation in Canada reached 6.8% in April, way above its 2% target, while its economy exhibited 3.1% growth in the first quarter of this year.