(Bloomberg) -- Former Bank of Canada Governor Stephen Poloz says inflation is likely to cool faster than people are expecting, opening the door for lower interest rates. Most Read from BloombergFed Saw ‘Significant’ Inflation Risk That May Merit More HikesGoldman CEO’s Most Loyal Deputy Is Tested by Mutinous PartnersNiger Soldiers Killed in Attacks by Armed Group, Ecowas SaysKen Griffin Reshaped Law Banning Chinese Real Estate PurchasesGoldman Sachs Blames Zero-Day Options for Fueling S&P 500 Se
The economist, who led Canada’s central bank from 2013 to 2020, said the country’s stronger-than-expected growth in the first half of the year was driven by population increases and the resolution of unique supply shocks from the pandemic. An early-year jump in household spending was likely a mirage, he said, driven by savings built up during the Covid lockdowns.
Poloz didn’t criticize the central bank or his successor. But he said it’s “just arithmetic” that Canadian households, which carry record levels of debt, will be more sensitive to higher rates than before the 2008 financial crisis. Despite his more sanguine view of inflation, Poloz said he understands central bankers’ recent moves to tighten policy as a prudent way to finish the job and get price pressures all the way back to the 2% target. He made the comments ahead of the release of data that showed the inflation rate accelerated to 3.3% in July.
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