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MNI BRIEF: BOC Says To Keep Price Gains From Becoming Embedded

Elevated inflation means now isn't the time to use flexibility to pursue full employment

(MNI) OTTAWA

Bank of Canada Governor Tiff Macklem in a speech Wednesday said he will keep elevated global price pressures from becoming "embedded" into inflation running at the fastest pace in decades.

Price expectations remain well anchored in a well-advanced economic rebound and inflation should slow in the second half of next year, he said. The inflation-targeting agreement with the government refreshed Monday allows for some flexibility to overshoot the 2% CPI goal and recognizes that lower global neutral rates will mean more use of forward guidance and asset purchases, Macklem said.

"Having ended QE, we are now focused on our forward guidance—on assessing the diminishing degree of slack in the economy and on bringing inflation sustainably back to target," he said.

Last week the Bank said conditions for a rate increase could be in place by April. Today Macklem said that in general, full employment and keeping inflation on target "go hand in hand."

MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com
Bank of CanadaPolicy NewsHomepageCanadaTopics Bank of Canada Market NewsBriefNorth AmericaStoryRegionCentral Bank News
MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com
Bank of CanadaPolicy NewsHomepageCanadaTopics Bank of Canada Market NewsBriefNorth AmericaStoryRegionCentral Bank News

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