The Canadian dollar strengthened against its US counterpart on Wednesday, as domestic data showed a further increase in January inflation.

Canada's annual inflation rate surged by 5.1% to a 30-year high. This was the 10th consecutive month when growth was above the Bank of Canada's benchmark range of 1-3%. It also shows that food and housing prices continued to rise.

In turn, oil, which is one of Canada's main exports, has recouped part of the decline.

However, analysts doubt that this data will be enough for the Central Bank to raise the interest rate by 50 basis points instead of 25 at the monetary policy meeting on March 2.

Bank of Canada's Deputy Governor, Timothy Lane, said in a university speech that inflation is likely to be more stable than predicted, and the Central Bank is increasingly focusing on countering these risks.

According to the Central Bank last month, the recession in the Canadian economy had been overcome, and interest rates should rise from their current low of 0.25%. In addition, Governor Tiff Macklem said that Canadians should expect multiple rate increases.