TORONTO (AP) – Canada yesterday became the first Group of Seven nation to raise interest rates since the global financial crisis, but said any further hikes would depend on global economic conditions.

The Bank of Canada increased its key interest rate by a quarter point to 0.50 percent from a record-low rate of 0.25 percent.

The bank said thus far the impact of Europe's sovereign debt crisis in Canada has largely been limited to a modest fall in commodity prices.

It said the decision to raise rates still leaves considerable monetary stimulus in place.

Economists widely expected the central bank to raise rates after the country's economy grew 6.1 percent in the first three months of this year, emerging from the global downturn faster than the US.

Canada withstood the global economic crisis better than most developed countries. Canada has not experienced the failure of any major financial institution, and there has been no crippling mortgage meltdown or banking crisis due to greater regulation.

"While Canada joined with other countries in taking interest rates down to virtually zero the sense of crisis was never as great here," said Avery Shenfeld, chief economist at CIBC World Markets.

The government recently tightened some mortgage rules over concerns low rates could lead to a bubble. A hot housing market fueled by low rates and rising inflation factored into the rate hike.

The bank noted the robust 6.1 percent growth of Canada's economy led by housing and consumer spending. But Canada's economy, a resource-rich economy dependent on oil and other commodity prices, remains vulnerable to a global downturn.

Shenfeld pointed out that the central bank didn't include the usual statement about further rate hikes being required.

"They've left themselves an out to stop after one trivial move if financial markets and commodity markets continue to tell them that the global economy is going in the other direction," Shenfeld said.

Canada's dollar fell 0.64 to US95.19 cents after the announcement. The central bank said economic conditions around the world are uneven and there's the possibility of renewed weakness in Europe.

"Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments," the bank said

Royal Bank Chief Economist Craig Wright noted that although Canada is the first of the G-7 countries to raise rates it is a very modest move. The G-7 includes the United States, the United Kingdom, France, Germany, Italy and Japan.

Australia's central bank left its key interest rate unchanged at 4.5 percent yesterday, citing increased caution among investors in the wake of Europe's sovereign debt crisis. Australia, which like Canada is heavily dependent on commodity exports, has increased the interest rate six times since October (see also Page 35).

Wright said Canada's central bank's statement shows that further rate hikes are not assured.

"It's probably well warranted given the uncertainties out there," he said.

Mark Carney, the head of Canada's central bank, had pledged in April, 2009 to hold rates at the historic-low through mid-2010, but said in his last statement in April that the need for record-low rates is now passing and it is appropriate to begin to lessen the degree of monetary stimulus.

Carney is a former Goldman Sachs executive who took the central bank's top post on February 1, 2008.