Inflation rate will remain 'painfully high': Tiff Macklem
As Canadians continue to feel the squeeze from an increased cost of living, Bank of Canada Governor Tiff Macklem says Canada's inflation rate is set to remain "painfully high" for the rest of the year.
On Wednesday, Statistics Canada reported the country's annual inflation rate rose to 8.1 per cent in June, up from 7.7 per cent in May, marking the largest yearly change since January 1983.
In an exclusive interview with CTV News' Evan Solomon, Macklem said the inflation rate is "unfortunately… probably going to start with a seven for the rest of the year."
"It is going to be painfully high," Macklem said Wednesday.
Last month's inflation rate increase was mainly attributed to higher gasoline prices. In the interview, Macklem said gas prices have since come down and so he expects in a month from now, when the national statistics agency publishes its July inflation data, the rate "probably will come down a bit."
However, Macklem said demand is running ahead of the economy's ability to produce the goods people want, which will continue to create inflationary pressures.
In response to higher than expected inflation, on July 13 the Bank of Canada hiked its overnight interest rate by 100 basis points to 2.5 per cent. It was the biggest rate hike by the central bank since August 1998.
The next rate decision from the Bank of Canada is set for Sept. 7, following the scheduled Aug. 16 StatCan release of its July inflation report.
In the interview, Macklem said that while getting inflation back to the two per cent target is paramount, he's anticipating increasing the policy rate again "pretty quickly."
"We are deliberately front-loading our interest rate response. We want to get ahead of this," he said.
In the interview, Macklem also spoke about what's driving the current economic situation, and whether he thinks a recession is on the horizon.