Senior Director of Canadian Economics
Bank of Canada (BoC). Colossal rate hike aims to lower actual and expected inflation
TIt’s not easy being a central banker these days, and they’re certainly not winning any popularity contests. Inflation is red hot and household inflation expectations keep moving higher, risking further accelerating wage gains and a vicious wage-price spiral. The Bank’s Governing Council recognizes that it’s behind the curve and rates need to rise aggressively to force inflation back to target. With global factors like the war in Ukraine and supply chain disruptions still keeping prices elevated, the domestic economy is bearing the burden lowering inflation through a chilling of domestic demand. Interest-sensitive sectors like housing are bearing the brunt of the adjustment, and consumption may be next.
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