In 'quite a bit of shock' to see BoC so aggressive on hikes, won't help Canadians: Manulife economist
Bank of Canada Governor Tiff Macklem wants to reassure Canadians his central bank is more than capable of bringing inflation back down to its target.
“We are going to keep inflation under control,” said Macklem, in an interview on CTV’s Question Period Sunday. “We know what our job is.
“Our job is to make sure the increases we’re seeing in globally-traded prices today don’t turn into generalized and enduring inflation in Canada.”
Macklem said the central bank has the tools and will be adjusting them to bring inflation back down to its consumer price appreciation target of two per cent.
These comments come not long after the Bank of Canada brought an end to its quantitative easing program, while also moving up its timeline for a possible interest rate hike, hinting at April as a possible first post-pandemic increase to borrowing costs.
Macklem, in the bank’s update late October, also raised the central bank’s forecast for inflation to 3.4 per cent for both 2021 and 2022.
Concerns about runaway consumer prices have often been dismissed as “transitory” by central bankers, including Macklem and U.S Federal Reserve Chairman Jerome Powell, but Macklem admits that word may not be the most accurate.
“Transitory to economists means not permanent, but to a lot of people that word means it will be over quickly,” he said, taking a stab at a more appropriate term. “It’s probably something like transitory, but not short-lived.”
While acknowledging that inflation isn’t just a problem in Canada, and that global supply chain issues are a major factor in consumer price pressures around the world, he said the Canadian consumer has a role to play in lowering inflation.
“We’ve seen this rapid surge in global demand for goods. The problem is supply is still impaired. There’s still production problems because plants get shutdown because of COVID outbreaks,” said Macklem.
“As consumer households start to shift back to services and less goods, that will take some pressure off.”
Supply chain disruptions notwithstanding, Macklem concluded the Bank of Canada remains in control of inflation.
“We’re going to continue to adjust our monetary settings. The goal is to secure that complete recovery, and bring inflation back to target.”