The clock is ticking on Canada's record-low borrowing costs, as inflation continues to move at a faster rate than the central bank had expected.

The hot reading on inflation issued by Statistics Canada Friday is raising expectations that the Bank of Canada could lift interest rates as early as June.

Economists, meanwhile, rushed to boost their growth forecasts as the country's economic rebound gathers steam.

Increasing inflation, coupled with an improving economy, means Bank of Canada Governor Mark Carney is likely to boost rock-bottom interest rates sooner rather than later, some economists say.

Still, many economists said Canada's core inflation numbers were skewed because of hotels in Vancouver that charged exorbitant rates during the Winter Olympics. In one case, a hotel that normally marketed itself as a discount option was charging $1,200 a night for a suite that sleeps six people, a steep markup from the usual maximum of about $280.

Mr. Carney pledged last April to keep the benchmark rate at 0.25 per cent through the middle of this year, or longer depending on the inflation outlook. He will update his inflation and growth forecasts during the week of April 20.

Increasingly, economists say if he doesn't start tightening in June, then he'll likely hike rates the following month.

Most economists say Canada's central bank will lift rates in increments of no more than 0.25 of a percentage point and may stop after a few moves to re-evaluate. That's how the Reserve Bank of Australia has proceeded since last fall, when it became the first major central bank to tighten as the dust started to settle on the crisis.