The Bank of Canada is raising its key interest rate by a quarter of a percentage point and says it expects this to be the last rate hike of the cycle.

Today’s interest rate increase marks the eighth consecutive rate hike since March as the central bank fights off decades-high inflation.

Its key interest rate now stands at 4.5 per cent, the highest it’s been since 2007.

The central bank says the Canadian economy is still overheated, prompting its governing council to raise interest rates once again.

However, if economic developments remain in line with its current projections, the central bank says it expects to hold its key interest rate at its current level.

In its quarterly monetary policy report, the Bank of Canada projects growth in the economy will stall through the first half of the year, while inflation will ease to three per cent by mid-2023.