Macklem tells senators path for falling inflation rates is uncertain
BNN Bloomberg
The country's top central banker is warning of uncertainty for how quickly three-decade-high inflation rates will come back down to the Bank of Canada's comfort zone.
OTTAWA - The country's top central banker is warning of uncertainty for how quickly three-decade-high inflation rates will come back down to the Bank of Canada's comfort zone.
Governor Tiff Macklem told the Senate's banking committee on Wednesday that the cloudy outlook is due to the unique circumstances surrounding the pandemic and the global reopening of local economies.
Supply-chain issues that has driven up shipping costs and consumer prices could last longer, Macklem said, as he noted that they have been more persistent and pervasive than the bank first expected.
The result has been that the annual pace of inflation climbed in December to 4.8 per cent, a pace that hadn't been seen since September 1991.
Macklem told senators that the annual inflation rate could stay “uncomfortably high'' around five per cent over the first half of 2022, noting the impact that will have on lower-income Canadians as prices rise for gas and food.
The uncertainty in the outlook prompted senators to ask Macklem to defend the bank's recent forecast that inflation rates would drop close to the Bank of Canada's comfort zone by the end of 2022, given how off the mark previous forecasts for inflation turned out to be.
