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MNI INTERVIEW: Neutral BOC Rate Can Bring Soft Landing -Poloz

(MNI) Ottawa

Former BOC governor says inflation may slow a lot next year if oil prices top out.

Former Bank of Canada Governor Stephen Poloz told MNI Friday that lifting interest rates to neutral could be enough to curb inflation and price expectations without triggering a recession.

Higher global commodity prices and a "very tight" labor market create risks of more embedded inflation expectations that have to be dealt with, Poloz said in an interview Friday. “That has the ingredients to cause inflation to go up, and so therefore the normalization of interest rates would be intended to eliminate that excess demand, so that inflation no longer has this upward pressure.”

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Former Bank of Canada Governor Stephen Poloz told MNI Friday that lifting interest rates to neutral could be enough to curb inflation and price expectations without triggering a recession.

Higher global commodity prices and a "very tight" labor market create risks of more embedded inflation expectations that have to be dealt with, Poloz said in an interview Friday. “That has the ingredients to cause inflation to go up, and so therefore the normalization of interest rates would be intended to eliminate that excess demand, so that inflation no longer has this upward pressure.”

Keep reading...Show less