BoC in 'catch-up mode' after falling behind on rates: National Bank

National Bank of Canada Chief Economist and Strategist Stéfane Marion is joining the growing chorus of voices calling on the Bank of Canada to act decisively to quell inflation not seen since 1991.

National Bank of Canada Chief Economist and Strategist Stéfane Marion is joining the growing chorus of voices calling on the Bank of Canada to act decisively to quell inflation not seen since 1991.

In an interview Friday, Marion said the central bank waited too long to begin increasing rates, given employment rates were steadily falling, indicating the economic recovery was well underway.

“To allow your inflation rate to surpass the unemployment rate means that the Bank of Canada was a little bit too permissive, and as of last November they were claiming that the unemployment rate was not a good measure of potentially inflationary pressure,” he said.

“The last few months have proven the Bank of Canada wrong, so now it’s catch-up mode.”

Marion’s comments come on the heels of Scotiabank Vice-President and Head of Capital Markets Economics Derek Holt declaring there’s a “solid case” for the Bank of Canada to deliver a full percentage point increase, though Holt believes a half percentage point remains the likely scenario at the June meeting.

Bank of Canada Governor Tiff Macklem has acknowledged the need to rein in inflation, which hit 6.7 per cent last month, stating the central bank is “prepared to be as forceful as needed” when it comes to monetary tightening.