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Policymakers will look through a temporary pick-up in inflation, Governor Tiff Macklem said.
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Bank of Canada Governor Tiff Macklem told lawmakers Tuesday he will support the economy through the entire rebound from the pandemic and look through a temporary pick-up in inflation, a week after the BOC shifted forward its timing for withdrawing monetary support.
"This economy still has some ways to go," Macklem said. "We have seen impressive resilience of this economy." His comments mirror industry sources telling MNI the Canadian economy has held up amid Covid.
Last week's inflation report, showing price rises quickened to 2.2% in March from February's 1.1% pace, was expected and policy makers will look through any temporary increase, Macklem said. He also reiterated the economy may return to full output and sustainable 2% inflation in the second half of next year, conditions he's laid out for hiking the record low 0.25% policy interest rate.
The governor also fended off questions from an opposition Conservative member that his revised CAD3 billion weekly pace of QE was designed to offset heavy and inflationary borrowing by the Liberal government. Macklem said the program's aim is meeting the inflation target and "our policies are working."