Bank of Canada Governor Tiff Macklem has reiterated that the central bank views rising consumer prices for everything from food to gasoline as "transitory" and says that inflation will be reined in at the appropriate time.
"We are going to keep inflation under control," Macklem said in a television interview. "Our job is to make sure the increases we’re seeing in globally-traded prices today don’t turn into generalized and enduring inflation in Canada."
Macklem said the central bank has the tools and will be adjusting them to bring inflation back down to its consumer price appreciation target of 2%.
These comments come after the Bank of Canada brought an end to its quantitative easing program, while also moving up its timeline for a possible interest rate increase, hinting at April 2022 as a possible first post-pandemic increase to borrowing costs in Canada.
In the central bank’s most recent update in late October, it raised its forecast for inflation to 3.4% for both this year and 2022.
Concerns about runaway consumer prices have often been dismissed as "transitory" by central bankers, including Macklem and U.S Federal Reserve Chairman Jerome Powell, but Macklem admits that the word may not be the most accurate.
"Transitory to economists means not permanent, but to a lot of people that word means it will be over quickly," he said, taking a stab at a more appropriate term. "It’s probably something like transitory, but not short-lived."
While acknowledging that inflation isn’t just a problem in Canada, and that global supply chain issues are a major factor in consumer price pressures around the world, Macklem said the Canadian consumer has a role to play in lowering inflation.
"We’ve seen this rapid surge in global demand for goods. The problem is supply is still impaired. There’s still production problems because plants get shut down because of COVID outbreaks," said Macklem.
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