The Bank of Canada is raising its key interest rate by three-quarters of a percentage point today.

The rate hike matches up with what many economists were expecting, bringing the bank’s key rate to 3.25 per cent.

In the rate announcement, the Bank of Canada says global inflation remains high while the Canadian economy continues to operate in “excess demand.”

Canada’s year-over-year inflation rate was 7.6 per cent in July, easing from 8.1 per cent in June as gas prices fell.

However, the bank says its core measures of inflation, which tend to be less volatile, continues to move up and short-term inflation expectations remain high.

Given that outlook, the central bank says rates will need to rise further to bring inflation down to its two per cent target.