Former BoC Governor expects another 6 to 12 months of inflationary pressures before they 'work their way out'
A former governor of the Bank of Canada is bracing for the inflationary trends that central bankers are wrestling with around the world to last a little longer than some people might think.
"The word transitory sounds really short to people," said Stephen Poloz, who served as the central bank's governor from 2013 until 2020, in an interview Thursday.
"I think the big things that are affecting the view right now will take probably into next spring, say the next six to 12 months for them to work their way out."
Poloz indicated he is still of the view that current forces that pushed Canada's inflation rate in September to the highest level since 2013 will ultimately prove to be transitory.
He said, however, the economy is currently facing "the most complex combination of forces that I've ever seen. So many things tugging in opposite directions. You'd expect that the net effect of all these things will be a question mark for some time."
And while Poloz indicated there's a clearer timeframe for pandemic-driven inflationary forces to work their way through the data, he suggested it's anyone's guess how long it will take for global supply chain problems to get sorted out. He added the best information about clearing up those shipping challenges will come directly from companies.
"I really don't have any idea how long they may take to clear up," he said.
"You know, it's like when you're in a traffic jam in the morning: you don't really know how long it's going to take to clear and even when it is cleared, it takes a while to get started up again in a nice rhythm as you're used to. So, hard to predict that."