MNI BRIEF: Canada Inflation Slows Gradually This Year-Macklem

Bank of Canada Governor Tiff Macklem said inflation will slow gradually this year and today's elevated prices are different than the 1970s in some important ways.

"I’ll be blunt. We’ve seen a big burst in inflation the first half of the year, and that’s going to be in those year-over-year numbers for a while, so it’s going to come down pretty gradually," according to a transcript Friday of a talk Macklem had Thursday with CFIB.

Inflation of the 1970s is being echoed today with high oil prices and excess demand, Macklem said in response to audience questions. What's different now is the sharp rebound following the pandemic, and back then "monetary policy was adrift" and "responded slowly," Macklem said. He pointed to Wednesday's 100bp rate hike as evidence everyone sees the need to fight inflation, saying "the step we took was a bit bigger than most people expected, but even that, I think, was digested."

Former advisers have told MNI the next rate increase could be as low as 50bps or as high as another 100bps. (See: MNI INTERVIEW: BOC To Slow Hiking Pace After 100BP Move- Ragan)