Highlights From Bank of Canada Deputy Paul Beaudry's Speech

From the text of Beaudry's speech in Gatineau, Quebec:

"In the deliberations for yesterday’s decision, we noted that price pressures are broadening and inflation is much higher than we expected and likely to go higher still before easing. This raises the likelihood that we may need to raise the policy rate to the top end or above the neutral range to bring demand and supply into balance and keep inflation expectations well anchored." 

"We are taking these large steps because inflation has been persistently high, the economy is overheating, and the risk that elevated inflation will become entrenched has increased. The Governing Council is steadfast in its commitment to return inflation to the 2% target and is prepared to act more forcefully if needed."

"The bottom line is that the risk is now greater that inflation expectations could de-anchor and high inflation could become entrenched." 

"The risk we were managing was that if higher inflation lasted longer than anticipated, it could eventually affect expectations and start to become entrenched. This risk seemed appropriate to take at the time, given the slack in the economy and the view that the supply-driven sources of elevated inflation would likely prove temporary."

"There is no longer a trade-off: we must raise interest rates, both to bring demand in line with supply and to ensure entrenched inflation cannot take hold."