If the U.S. Federal Reserve continues with its aggressive hiking strategy, that doesn’t mean the Bank of Canada has to follow, according to Randal Quarles, former vice chair of the Fed.

“I think inevitably, given the connections between our economies, there will be sort of significant tracking (of interest rates),” said the chairman and co-founder of The Cynosure Group, in an interview Wednesday.

“But I don't think that the Fed’s moves should be targeted, and I'm pretty sure that Governor (Tiff) Macklem won't be targeting them. They’ll be looking at what's right for Canada.”

Quarles added that the U.S. Federal Reserve will continue to “do what’s necessary” to get inflation under control, and even a recession won’t stop its aggressive hiking strategy.

“Now, expectations of a recession might result in an abating of inflationary pressures and that could allow the Fed to moderate its course,” Quarles said.

“But if it believes inflationary pressures are still existent, the near expectation of a recession will not change its course.”

POWELL SIGNALS MORE PAIN AHEAD

Last month, U.S. central bank officials hiked interest rates by 75 basis points for a third-straight time, which lifted the target for the benchmark federal funds rate to a range of three per cent to 3.25 per cent.

In a news conference on Sept. 21, U.S. Federal Reserve Chair Jerome Powell signalled there would be more aggressive hikes on the horizon, and acknowledged the central bank’s moves will cause pain for some Americans. 

“We've just moved I think probably into the very lowest level of what might be restrictive and, certainly in my view and the view of the committee, there's a ways to go,” Powell said.