Bank of Canada interest rate hike

2023 - 2 - 6

Post cover — Image courtesy of "Globalnews.ca"

Bank of Canada's interest rate hikes are working to tame inflation ... (Globalnews.ca)

Bank of Canada Governor Tiff Macklem argued that the rapid interest rate hikes from the central bank in the past year are working already to tame ...

An English transcript of his prepared remarks was posted online. “With inflation above six per cent, we are still a long way from the two per cent target,” Macklem said Tuesday. Read next: Monetary policy is working.” Read more:

Macklem reiterates BoC rate hike pause as monetary policy enters ... (The Globe and Mail)

After delivering a quarter-point increase in late January, the bank announced a “conditional pause” to further rate hikes.

Following the bank’s rate decision in January, he said that it was far too early to talk about easing monetary policy. Instead, we need to pause rate hikes before we slow the economy and inflation too much. “If new evidence begins to accumulate that inflation is not declining in line with our forecast, we are prepared to raise our policy rate further,” Mr. Consumer price index inflation remains far above the bank’s 2-per-cent target, clocking in at an annual rate of 6.3 per cent in January. “But if new data are broadly in line with our forecast and inflation comes down as predicted, then we won’t need to raise rates further.” After delivering a quarter-point increase in late January, the bank announced a “conditional pause” to further rate hikes.

Bank of Canada says no new rate hikes needed if inflation falls as ... (Reuters)

Bank of Canada Governor Tiff Macklem on Tuesday said that no further rate hikes will be needed if, as expected, the economy stalls and inflation comes down.

When asked by reporters about the survey, Macklem reiterated that it was "really far too early to be thinking about cutting rates. But the overall tone was more dovish than his comments following last month's rate hike, when he told Reuters he wasn't even thinking about a cut. counterpart will be discussing the need for further monetary tightening south of the border," Royce Mendes, head of macro strategy at Desjardins Group, said in a note. "Inflation is turning the corner. Last month, it said it would hold off on further moves to let the effects of past increases sink in. Federal Reserve Chair Jerome Powell on Tuesday said it would take " [quite a bit of time](/markets/rates-bonds/feds-kashkari-says-hes-sticking-54-rate-hike-view-after-surprising-jobs-report-2023-02-07/)" to bring U.S.

Bank of Canada to Pause Rate Hikes as Economy Cools to "Close ... (Investing.com Canada)

Part of the reason for easing inflation has been an easing in commodity prices and the untangling of supply chain snarls. “Inflation is turning the corner.

Macklem noting that economic growth in Canada will be “close to zero” through the third quarter of this year. Despite the decidedly dovish tilt to today’s comments, Mr. The Bank of Canada currently forecasts that CPI will fall to 3% by mid-year and back to its 2% target in 2024. Another effect of the rate hike sprees is a cooldown of excess demand in the Canadian economy, with Mr. The central bank has lifted rates at a record pace over the last year, from 0.25% in March to its current level of 4.5%. Macklem added, “Typically, we don’t see the full effects of changes in our overnight rate for 18 to 24 months”.

Canada's economy is slowing down and that's 'a good thing' given ... (CBC.ca)

Bank of Canada governor Tiff Macklem says that although a slowing economy may not seem like a good thing, it is when the economy is overheated.

counterpart will be discussing the need for further monetary tightening south of the border," Mendes said. Macklem called this a "welcome development," but stressed inflation is still too high. It has hiked its key interest rate eight consecutive times since March, bringing it from near-zero to 4.5 per cent. The Bank of Canada forecasts the annual inflation rate will fall to three per cent by mid-year and to two per cent in 2024. However, last month, the Bank of Canada said it will take a "conditional" pause to assess the effects of higher interest rates on the economy. To slow the economy domestically, the Bank of Canada has embarked on one of the

Higher interest rates are working (Bank of Canada)

Governor Tiff Macklem explains how the Bank of Canada's increases to the policy interest rate will cool the economy and bring inflation down.

And if the strong job market doesn’t cool, increased labour costs could continue to push prices up and make it harder to get inflation to 2%. We are resolute in our commitment to restoring price stability for Canadians.” And we’re ready to act forcefully again if we need to. She also talks about how we are improving our transparency with Canadians. We’ve already seen inflation come down for the prices of many goods. - Less borrowing means lower demand for housing and for goods and services. We aim for inflation of 2% a year. With economic growth slowing to close to zero in the first half of 2023, inflation should drop to around 3% in the middle of the year and reach the 2% target in 2024. The process takes time, but here’s how it works: Monetary policy doesn’t work as quickly or painlessly as everyone would like, but it works. It’s what we mean by price stability. This pause is conditional: it depends on whether the economy develops as we think it will and whether inflation continues to fall.

Opinion | Having found its nerve, the Bank of Canada must hold it (Toronto Star)

The Bank of Canada must stay the course on high interest rates in the face of a frenzied appetite for them to come back down.

Without further comprehensive employment and consumer price reports for a while, the central bank is probably just trying to temper expectations — but markets and the public are never that rational. Behaviour has a powerful effect on economics and promise of a pause risks playing into a yearning for sunnier alternatives. But people need to be reminded what the reality is rather than what they want it to be. While Macklem was clear a pause doesn’t mean a pivot, his conditional commitment feeds an increasingly persistent notion that we are turning the corner on inflation. Instead, last week Canada’s central bank deviated from all others in G10 economies by explicitly signalling that a pause to interest rate hikes might be on the horizon. Since then, it has remained steadfast in tightening monetary policy but now may have decided to move more quickly to a much hoped for endgame.