Bank of Canada Raises Rates, Declares Pause to Assess Economic Impact

OTTAWA—The Bank of Canada raised interest rates on Wednesday by a quarter point and said it would now pause to assess the economic impact from sharply higher borrowing costs.

The Bank of Canada increased its target for the overnight rate to 4.50% from 4.25%, or the highest level in over 15 years. More important, the Bank of Canada is one of the first central banks among major developed-world economies to declare that it is done for now raising interest rates in the quest to bring inflation down from historically high levels. Central banks are trying to balance the risks between raising rates too aggressively and triggering a deep recession, and raising rates at too tepid a pace and allowing inflation expectations to remain elevated.