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"Surveys suggest that short-term (inflation) expectations remain high. Inflation eased to 7.6% in July from 8.1% in June, but the decline was due to a drop in gasoline prices, with the core measures continuing to move higher, the central bank said. The front-runner to lead Canada's opposition Conservatives, Pierre Poilievre, has promised to fire central bank Governor Tiff Macklem if he's elected prime minister and to replace him with someone "who will fight inflation."Ĭanadian Finance Minister Chrystia Freeland defended the central bank to reporters on Wednesday, saying it had the mandate, tools and experience to tackle the price gain problem. The Bank of Canada, like many of its peers, faces intense criticism for downplaying hot inflation as "transitory" last year and not acting swiftly enough as price increases gathered steam. "I think they are trying to keep as many options as open as possible," he added.
"It does feel as though the bank is preparing the market for the possibility that rates will need to keep moving higher for more than one or two more meetings," said Andrew Kelvin, chief Canada strategist at TD Securities. The Bank of Canada leads its advanced-economy peers in policy tightening, having raised its policy rate by 300 basis points since March from a record low 0.25%, and it does not yet appear to be done. "As the effects of tighter monetary policy work through the economy, we will be assessing how much higher interest rates need to go to return inflation to target." "Given the outlook for inflation, the Governing Council still judges the policy interest rate will need to rise further," the central bank said in a statement after delivering its fourth consecutive outsized hike. Rates are now above the BoC's neutral range, meaning that for the first time in about two decades monetary policy is likely to restrict growth. The central bank, in a regular rate decision, hiked its policy rate to 3.25% from 2.50%, matching analyst forecasts and hitting a level not seen since April 2008. OTTAWA (Reuters) - The Bank of Canada hiked interest rates to their highest level in 14 years on Wednesday, as expected, and signaled its most aggressive tightening campaign in decades was not yet done as it battles to tame inflation. FILE PHOTO: Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada June 22, 2020.
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