MNI BRIEF: BOC Sees Temporary Inflation, Hike in Mid-Qtrs 2022

Bank of Canada Deputy Governor Paul Beaudry said Tuesday that some of the recent run-up in inflation is linked to temporary global pressures and reiterated the view that a rate increase could be appropriate in the second or third quarters of next year.

"A lot of these forces that are international are more from this temporary part that's reflecting this kind of quick return of the global economy back to normal," Beaudry said in response to question about inflation after a speech. "By next summer we think a lot of those forces will start kind of moving away, and that will kind of bring us back down to inflation closer to 2% by the end of next year."

"Keeping interest rates low during this period is actually helping us kind of come back and get out of this - the recession that was induced by the pandemic. And we think that the capacity should be fully absorbed sometime by the middle quarters of next year, which is when we're indicating at this point where we think we potentially would be raising rates."