Bank of Canada Governor Stephen Poloz had no choice but to raise interest rates and acknowledge that Canada’s economy appears on track, said Benjamin Tal, deputy chief economist at CIBC Capital Markets.

“You cannot ignore the good news — there is a point when you have to admit that something good is happening,” Tal told BNN in an interview.

The Bank of Canada boosted its benchmark interest rate by a quarter percentage point, its first increase in nearly seven years. Failure to boost interest rates would have sent the wrong signal to the private sector and may have hurt business investment, said Tal.

“If you are a CEO of a company and the economy is doing fine and you want to invest and then the central bank — the governor — is telling you ‘what you see is not what you see’ then you are not investing and all of a sudden [BoC] communication is turning into GDP and that’s important,” he said.

Tal says Poloz may have been holding off on an interest rate increase in an attempt to keep the Canadian dollar lower for longer to help promote exports. But by concentrating on the dollar, the BoC may have muddied the waters for investors, Tal says.

The Canadian dollar soared to its highest level in nearly a year after the Bank of Canada announced its increase in lending rates earlier Wednesday.

“Their communication was sub-optimal at best. Just a few weeks ago they were able to only see the clouds, today they see the sun,” he said. “The market is a bit confused, that’s why we see this volatility — at least as far as the loonie is concerned.”