Bank of Canada leaves door open to 75-basis-point rate hike
BNN Bloomberg
Governor Tiff Macklem acknowledged there’s potential for even larger increases to borrowing costs as the Bank of Canada aggressively wrestles inflation down from a three decade high.
Governor Tiff Macklem acknowledged there’s potential for even larger increases to borrowing costs as the Bank of Canada aggressively wrestles inflation down from a three decade high.
Macklem and his officials delivered the first 50-basis-point increase in interest rates among Group of Seven nations last week and signaled more hikes to come. This week, annual consumer price gains blew past expectations and spiked to 6.7 per cent
Asked about the possibility of moving by more than half a percentage point at a future decision, Macklem said he was “not going to rule anything out.”
Speaking Thursday from Washington, where he was attending meetings of the International Monetary Fund and World Bank, the Canadian central banker reiterated that monetary policy needs to normalize reasonably quickly. “We’re prepared to be as forceful as needed and I’m really going to let those words speak for themselves,” he said.
His comments will fuel speculation the Bank of Canada may unleash a 75-basis-point increase at its next decision on June 1 to keep inflation expectations moored around the bank’s 2 per cent target. A move of that scale hasn’t happened in the northern nation since the late 1990s.
Central bankers around the world, including the Federal Reserve, are signaling that faster and larger increases to interest rates are necessary to quell price pressures.
