Bank of Canada Governor Tiff Macklem has reaffirmed that more interest rate hikes are coming
as the central bank works to bring inflation back down to its 2% target.
In a speech, Macklem said that there is a risk that inflation will become entrenched in Canada
should the Bank of Canada fail to raise interest rates sufficiently to bring consumer prices lower.
“Simply put, there is more to be done,” Macklem said to the Halifax Chamber of Commerce.
“The clear implication is that further interest rate increases are warranted.”
Macklem added that the Canadian economy remains in excess demand, with businesses
grappling with a tight labor market and inflation showing no signs of letting up.
The governor’s comments reaffirm that the Bank of Canada plans to continue with its
aggressive interest rate hikes in the coming months.
Already this year, Canada’s central bank has lifted its trendsetting interest rate by three
percentage points to 3.25%, implementing the most aggressive rate hikes among developed
nations.
Economists expect the Bank of Canada to raise its overnight interest rate a further 50-basis
points at its next policy meeting on October 26.
Canada’s inflation rate currently stands at 7%, its highest level in 30 years and well above the
Bank of Canada’s target of 2%.
Macklem added in his speech that inflation “will not fade away by itself,” and that the central
bank “will need additional information before we consider moving to a more finely balanced
decision-by-decision approach.”
