BoC 'facing major dilemma' on rate hike timeline: CIBC's Tal
BNN Bloomberg
The Bank of Canada has some difficult realities to weigh ahead of its Jan. 26 interest rate decision.
The Bank of Canada has some difficult realities to weigh ahead of its Jan. 26 interest rate decision.
On one hand, the central bank’s latest Business Outlook Survey highlighted how concerns are continuing to mount in the business community about prolonged inflation. On the other hand, the Canadian economy is dealing with tighter lockdowns to curb the spread of the Omicron COVID-19 variant.
“That's a major dilemma” for the Bank of Canada, according to Benjamin Tal, deputy chief economist at CIBC Capital Markets.
“We are in the middle of the winter. Omicron is still with us. It will be with us throughout the winter. So if you're the Bank of Canada - so you want to start raising interest rates in the middle of this madness?” Tal said in an interview on Monday.
“At the same time, the business community is telling you to start moving.”
The Bank of Canada’s sole mandate is to keep inflation within a range of one to three per cent, and Governor Tiff Macklem has said he’s willing to let inflation run hot for a short period of time. But consumer prices have now been rising above the central bank’s target for nearly a year now, posing a threat to its credibility.
