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MNI BRIEF: BOC Less Focused On Neutral Rate With Hot Inflation

(MNI) OTTAWA
(MNI)

Bank of Canada Senior Deputy Governor Carolyn Rogers suggested Thursday that policymakers are less focused on the neutral interest rate when the main job is returning inflation to target.

"The thing that the Governing Council is most focused on is getting inflation back to target. We don’t have a target for interest rates, we have a target for inflation, that’s the target we’re focused on, we’re determined to get it back to 2%," Rogers said in response to a question from MNI after a speech in Calgary.

Earlier this year officials suggested they could hike to just beyond a neutral zone of 2%-3%. The BOC would be justified hiking rate to 4.75% given persistently high inflation, authors of a paper on the central bank's reaction function told MNI. (See: MNI INTERVIEW: Canada Could Hike To 4.75%-WLU Researchers)

There have been "early signs" that rate hikes to 3.25% from 0.25% since March are already working, and the Bank still sees a narrow path to a soft landing, Rogers said.

MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com
MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com

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