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MNI BRIEF: BOC Says Rate Must Keep Rising As Economy Overheats

Bank also aware the pandemic frayed public trust; defends its autonomy

(MNI) OTTAWA

The Bank of Canada must keep raising the low policy interest rate to hold down demand in a hot economy, Senior Deputy Governor Carolyn Rogers said Tuesday, without giving a view on whether another 50bp move or something bigger is needed.

"With the Canadian economy starting to overheat, we can't let demand get too far ahead of supply or we risk adding further to inflation," Rogers said in her debut speech as the No. 2 official, and the Bank's first such in-person remarks since the pandemic. The Bank last month raised rates 50bp to 1% and said neutral was 2.5%; the next meeting is June 1.

Hikes aren't on "autopilot" and officials "will be looking for signs that the economy is returning to balance," and inflation back to the 2% target, she said. Rogers also reviewed the Bank's pandemic actions and legislation protecting operational independence while keeping officials accountable. Last week a leading opposition lawmaker assailed the Bank for financing budget deficits with QE and missing the inflation surge.

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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