BoC Ex-Governor Dodge: Getting rates to neutral quickly should be top priority

Former Bank of Canada Governor David Dodge says he’s less concerned about the size of interest rate hikes coming from North American central bankers – as long as rates return to neutral in short order.

“I think it's been quite clear that central banks need to get up to neutral in North America quickly to make up for lost time in 2021,” Dodge, who is also a senior advisor at Bennett Jones LLP, told BNN Bloomberg on Thursday. Dodge served as Canada’s top central banker from 2001 to 2008.

“Whether they're going by 50 [basis] points, 75 [basis] points, or even making a full-point move really isn't so much the issue. The issue is to get it up quickly and to signal to the world that they are getting it up to neutral.”

There are growing expectations on Bay Street that the Bank of Canada will follow in the footsteps of the U.S. Federal Reserve and deliver a three-quarter point interest rate hike at its next meeting on July 13 to get monetary policy back to neutral.