David George-Cosh

Reporter

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Bank of Canada Governor Tiff Macklem wants Canadians to know that this period of high prices for goods ranging from furniture to cars will normalize over "some time" as inflation cools down, likely sometime in 2022. 

"We are working through these, but it's going to take some time," Macklem said during a question-and-answer session ahead of a virtual speech given to the Council on Foreign Relations in Washington. 

"I do want Canadians to be confident that we certainly understand that our job is to make sure that one-off price increases don't become ongoing inflation."

Macklem added that he expects inflation to remain above the top end of the Bank of Canada's three per cent target range "at least" until the end of the year.

Canada's inflation rate climbed to 4.1 per cent in August, the highest one-month move since 2003, amid surging housing costs and prices for passenger vehicles and household appliances. 

Macklem has previously warned against reading too much into the "temporary" move in inflation as the COVID-19 pandemic has led to a global supply-chain crunch for many goods as well as pent-up demand for services as the economy opens back up. 

In his Q&A session Thursday, Macklem reiterated that price increases and the implications for inflation will be "temporary". He did note the Canadian central bank has observed that medium-to-long term inflation indicators have not moved higher and that wage growth remains moderate. 

"Prices have come back up. Part of that is base year effects; prices were very low a year ago. They've normalized. Part of that is related to these very unique circumstances of the pandemic," he said.