The Bank of Canada today raised the Bank Rate and its operating band for the overnight rate by 1/4 of one percentage point. The new Bank Rate is 3 3/4 per cent and the operating band is 3 1/4 to 3 3/4 per cent.

In recent months there has been growing evidence that the Canadian economy is expanding rapidly and absorbing unused capacity. Indicators of aggregate demand, output, and money supply growth have all been strong.

The gathering momentum now evident in the economy has occurred largely as a result of the substantial monetary support that has been provided to offset the effects associated with private and public sector restructuring.

Given the lags between monetary policy actions and their effect on the economy, timely action to moderate the extent of monetary stimulus will contribute to making the economic expansion long lasting. Canadian interest rates remain below those in the United States, and monetary conditions continue to support economic growth with low inflation.