MNI BRIEF: BOC's 'Forceful' May Mean Hiking Pace Or Rate Level

Bank of Canada Deputy Governor Paul Beaudry said Thursday that the message around the potential for more forceful action could apply to the pace of rate hikes and how far borrowing costs ultimately rise.

"We were kind of trying to think both in terms of pace and level and the speed of getting there, and that was part of our deliberations,” he told reporters the day after the BOC hiked to 1.5% from 1%. In an earlier speech Beaudry said rates are more likely to rise above the Bank's neutral rate estimates of 2% to 3%.

Some measures of inflation expectations remain well anchored from one to two years out but the potential for a rise in price views "is worrying us," he said in response to a question from MNI. “It still will take a while, it’s not like this year it’s going to be back,” Beaudry said of inflation.

“We’re aiming for this soft landing, but it is a difficult compromise,” he said, noting the Bank has a main mandate to control inflation. Former Governor Stephen Poloz told MNI lifting rates to neutral could curb inflation without a recession. (See MNI: BOC Shifts To Say It's More Likely To Hike Above Neutral)