(Adds market reaction, economist comment)
OTTAWA, July 12 (Reuters) - The Bank of Canada raised interest rates for the first time in nearly seven years on Wednesday, citing confidence in its outlook and a need to look through soft inflation, but said it will wait for more economic data before committing to its next move.
The widely expected rate hike makes Canada the first major central bank to follow the Federal Reserve in removing some of the monetary stimulus poured into the global economy after the 2007-2009 financial crisis.
Economists said the central bank's statement suggested at least one more quarter-percentage point rate increase is in store for 2017, with more likely to follow gradually if growth continues to meet expectations.
"I thought the Bank of Canada did a masterful job today; they raised rates and they stopped short of promising another rate hike this year but they were broadly bullish on the economy which bodes well for another rate increase this year," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
The hike brought the bank's official interest rate to a still-low 0.75 percent and boosted the Canadian dollar to a 10-month high.
Years of ultra-low interest rates since the financial crisis spurred a borrowing binge and helped drive Canadian household debt to record levels in recent years, fueling a housing boom that has recently began to falter.
The bank said in its accompanying monetary policy report that activity in the housing sector has abated, largely due to sharp declines in resales in Toronto and surrounding areas.
The central bank has repeatedly warned about the vulnerabilities posed by the massive consumer debt but was forced to cut interest rates twice in 2015 as oil prices dropped, sideswiping Canada's energy-dependent economy.
In a decision that emphasized the lag between a rate hike and future inflation, the bank signaled it did not want to commit to a predetermined path of more hikes.
"Future adjustments to the target for the overnight rate will be guided by incoming data as they inform the bank's inflation outlook, keeping in mind continued uncertainty and financial system vulnerabilities," the bank said in a statement.
Acknowledging the contradiction in raising rates when inflation is low, the bank said it will analyze short-term price fluctuations "to determine the extent to which it remains appropriate to look through them," and noted temporary factors like electricity rebates have kept a lid on prices.
(Reporting by Andrea Hopkins and Leah Schnurr; Editing by Meredith Mazzilli)