MNI BRIEF: BOC To Be `As Forceful As Needed' Hiking Rates

Canada's central bank is "prepared to be as forceful as needed" hiking interest rates after a "humbling" inflation surge, and will likely be raising the near-term price forecast again after March's strong CPI report, Deputy Governor Toni Gravelle said Thursday.

"Our policy rate, at 1%, is too stimulative, especially when inflation is running significantly above the top of our control range. We need our policy rate to be at more neutral levels to help cool demand growth," Gravelle said. He didn't address whether a repeat of April's 50bp hike or going 75bp might be appropriate at the next meeting June 1; investors predict a move to 1.5%.

Rates should move toward neutral territory of 2%-3%, Gravelle said, reiterating the BOC could then pause or go further depending on factors such as how consumers handle the pinch of higher borrowing costs. He rejected a stagflation scenario, pointing to record low unemployment and an economy that can "handle" higher rates.