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Essentials of Monetary Policy

Bank of Canada (BoC). Speeding towards Neutral

June 1, 2022
Royce Mendes, Managing Director and Head of Macro Strategy • Tiago Figueiredo, Macro Strategist

The Bank of Canada is sticking in the fast lane in its drive towards normalizing monetary policy. The 50bp rate increase unleashed today cements this hiking cycle as the fastest in the inflation targeting era. But extraordinary times call for extraordinary measures. Central bankers are now more attuned to the overheating in the Canadian economy which is driving at least some of the excess inflation. Remember that this is the type of inflation the Bank of Canada can use their tools to control.

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