Despite some early signs of a slowing economy, Tiff Macklem says more interest rate hikes are necessary to bring inflation down
OTTAWA — Despite some early signs of a slowing economy, Bank of Canada governor Tiff Macklem says more interest rate hikes are necessary to bring inflation down.
As the economy fully reopened in the spring, pent-up demand for services in sectors like travel and recreation began driving inflation even higher, he said. As the Bank of Canada monitors inflation and the effects of higher interest rates, the governor said it will be paying close attention to its core measures of inflation, which tend to be less volatile than the overall inflation rate.
Since March, the central bank has raised its key interest rate from 0.25 per cent to 3.25 per cent, one of the fastest rate hike cycles in its history. In a note, CIBC chief economist Avery Shenfield said Macklem's speech had a "hawkish tilt." CIBC is forecasting the central bank will raise its key interest rate by half a percentage point later this month.
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