Julie Gordon and David Ljunggren
OTTAWA (Reuters) – The Bank of Canada made it clear on Thursday that it would not get out of its current pace of rapid rate hikes, with Governor Tiff Macklem saying there were no signs Indicates that underlying inflation is easing.
The central bank has raised the policy rate by 3740 basis points to 3. 25% Four of the five increases were above 25 basis points since March.
“We have yet to see clear evidence that underlying inflation has fallen. Combined with still-high near-term inflation expectations, it clearly means that further rate hikes are necessary,” MacCollum told a business audience in Halifax.
“In short, there is more work to be done. We need more information before we can consider moving to a more fine-tuned and balanced approach to decision-making.”
Macklem added that while forward-looking indicators suggest the Canadian economy is starting to slow, the labor market remains tight and demand still outstrips supply.
Economists said Thursday’s tone was clear, despite data from recent weeks that could change the central bank’s less hawkish stance.
“Don’t expect the Bank of Canada to shy away from excessive interest,” said Royce Mendes, head of macro strategy at Desjardins Group.
Comments that money market bets are more inclined to come 26 decision in October.
Macklem later said whether the central bank could cool the economy enough to curb the economy without triggering a recession The extent of inflation depends in part on the stickiness of price increases in Canada.
“There is a way to a soft landing, but it is narrow and there are risks,” he said in response to questions from the audience.
Canada’s inflation rate fell to 7.0% in August, with core inflation around 5%, which Macklem said was too high.
He added that the central bank will be watching closely Its core inflation measure, to “look for clear evidence of a turning point”, especially as attention turns to domestic price pressures.
But the bank’s focus will be on what is known as the CPI- Macklem said, Fine-tuning and median CPI, noting that the central bank is reassessing the common CPI indicator due to the recent sharp revision.
Reuters reported this week that economists and markets are scrambling to find reliable potential Inflation, as massive and frequent revisions undermine the credibility of CPI-common.
“CPI-common is becoming increasingly difficult to real-time used because it was subject to a large historical correction,” Macklem said. “With that in mind…we are reassessing the CPI-common. “
CAD/USD fell 1% to 1.3740, or 72.78 cents.