The Bank of Canada on Wednesday announced to keep its interest rate at 1.25 percent, but hinted that rate hikes could be coming as it noted the Canadian economy was a little stronger than expected in the first quarter.

A statement released by the bank said exports were more robust than forecast as data on imports of machinery and equipment suggest continued recovery in investment, but also pointed to softer real estate activity into the second quarter as the market continues to adjust to new mortgage guidelines and higher borrowing rates.

While the central bank noted uncertainty about trade policy and stresses in emerging market economies, it dropped oft-repeated language pledging a cautious approach to setting monetary policy, suggesting gradual rate hikes will soon resume.

"Overall, developments since April further reinforce Governing Council's view that higher interest rates will be warranted to keep inflation near target," the bank said.

It said it will "take a gradual approach to policy adjustments, guided by incoming data."

In a statement analysts called hawkish, the bank dropped previous references to rate increases being warranted "over time" and removed a phrase about "some monetary policy accommodation" still being needed to keep inflation on target.

The bank has raised rates three times since July 2017, most recently in January. But it has been on hold amid uncertainty about the renegotiation of the North American Free Trade Agreement and concern about how indebted consumers will handle higher rates.

The bank said inflation will likely be a bit higher in the near term than forecast in April, largely because of increases in gasoline prices, though it noted it will look through the transitory impact of gas price fluctuations.

The bank said data since April support its outlook for economic growth around two percent in the first half of 2018, with exports of goods more robust than forecast, while housing remained soft into the second quarter.

The bank added that there is some upside to the outlook for the U.S. economy, while the price of oil, a key Canadian export, has been higher than assumed in April.