October 12, 2022

According to the Bank of Canada’s top policymaker, indications that inflation pressures are moderating globally are insufficient to prevent further increases in interest rates because the domestic economy is still growing too quickly.

Tiff Macklem stated in a speech to the Halifax Chamber of Commerce on Thursday that domestic sources of price growth, such as the demand for services, remain too hot despite the fact that inflationary pressures from outside Canada, such as high global shipping rates and supply chain concerns, have subsided.

According to Statistics Canada, the annual rate of inflation came in at 7.0% in August as gas prices continued to decline while rising food prices reached a 41-year high.

Inflation, according to Macklem, was fueled by a surge in travel and leisure demand following the lifting of COVID-19 restrictions.

Even while the headline figure from Statistics Canada has decreased for two consecutive months, those factors have kept the Bank of Canada’s core inflation measurements hot.

The policy rate of the Bank of Canada is currently 3.25 percent, up 0.75 percentage points from the previous day, September 7.

Macklem acknowledged on Thursday that the central bank’s benchmark rate had increased by three percentage points during five straight increases since March, making this “one of the steepest and fastest tightening cycles we’ve ever performed.”

Source: Global News Canada
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