The Canadian dollar rose against its major counterparts during the New York session on Wednesday, as the Bank of Canada hiked its key interest rate by a quarter-percentage point amid stubbornly high inflation and stronger than expected economic growth.

In a surprise move, the BoC raised its key rate by 25 basis points to 4.75 percent from 4.50 percent.

The central bank said the rate hike reflects its view that monetary policy was not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the 2 percent target.

The Bank of Canada also said it is continuing its policy of quantitative tightening, which it said is complementing the restrictive stance of monetary policy and normalizing the bank's balance sheet.

The bank's Governing Council said it will continue to assess the dynamics of core inflation and the outlook for consumer price inflation.

The Bank of Canada reiterated that it remains resolute in its commitment to restoring price stability for Canadians.

The loonie touched 104.63 against the yen, its highest level since November 23. The currency is likely to challenge resistance around the 106.00 level.

The loonie climbed to more than a 4-week high of 1.3320 against the greenback and near a 4-month high of 1.4290 against the euro, off its early lows of 1.3426 and 1.4382, respectively. The loonie is seen finding resistance around 1.29 against the greenback and 1.40 against the euro.

The loonie edged up to 0.8900 against the aussie, from an early fresh 2-week low of 0.8988. The currency may find resistance around the 0.865 level.

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