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MNI INTERVIEW: Canada Overdoing Rate Hikes- Ex BOC Scholar

(MNI) OTTAWA
(MNI)

Further tightening may roil a fading economy, former BOC visiting scholar Stephen Williamson tells MNI.

The Bank of Canada is overdoing interest-rate hikes as inflation slows in an economy at risk of recession, but policymakers are showing little indication of changing course, former BOC visiting scholar Stephen Williamson told MNI.

The speed of the 300bp rise to 3.25% could prove just as jarring to the economy as its magnitude, as borrowers used to low rates have had little time to adjust, said Williamson, who has also been a researcher with the Federal Reserve. Inflation has begun slowing and could moderate to around 2% well ahead of the Bank's forecast for the end of 2024, he said.

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The Bank of Canada is overdoing interest-rate hikes as inflation slows in an economy at risk of recession, but policymakers are showing little indication of changing course, former BOC visiting scholar Stephen Williamson told MNI.

The speed of the 300bp rise to 3.25% could prove just as jarring to the economy as its magnitude, as borrowers used to low rates have had little time to adjust, said Williamson, who has also been a researcher with the Federal Reserve. Inflation has begun slowing and could moderate to around 2% well ahead of the Bank's forecast for the end of 2024, he said.

Keep reading...Show less