OTTAWA, Nov 1 (Reuters) – The Bank of Canada will need to raise interest rates again to fight high inflation, Governor Tiff Macklem said on Tuesday, reiterating that “we’re getting closer, but we’re not there yet.”
In his opening speech to the Senate’s banking, trade and economy committee, he said the central bank is still far from the goal of low, stable and predictable inflation.
Last week the Bank of Canada announced a smaller-than-expected interest rate hike and predicted the economy would stall over the next three quarters.
“How much more (rate hikes) will depend on how monetary policy works to slow demand, how supply challenges are resolved, and how inflation expectations and inflation respond to this tightening cycle,” Macklem said on Tuesday.
“The impact of higher rates will take time to spread throughout the economy. … There is no easy way to restore price stability.”
Inflation in Canada has slowed to 6.9% from a peak of 8.1%, but core measures remain broad-based and persistent. The central bank revised its inflation forecast slightly lower and said it was looking at a return to the 2% target by the end of 2024.
Reporting by David Ljunggren and Julie Gordon; Editing by Leslie Adler
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