BoC’s expects policy rate will need additional hikes

“We expect our policy rate will need to rise further”, said Bank of Canada (BoC) Governor Tiff Macklem. Macklem also noted that how much further rates go up will depend on how monetary policy is working, how supply challenges are resolving and how inflation is responding to this tightening cycle.

“We have yet to see a generalized decline in price pressures”, he said adding that “There are no easy outs to restoring price stability”.

Macklem reiterated that the current tightening phase will draw to a close. He stressed that the Canadian economy is getting closer, but that point of stability has not come yet. He also reiterated that monetary policymakers are still far from goal of low, stable and predictable inflation.

According to Macklem, it will take time to get back to solid growth with low inflation. The USD/CAD pair holds onto the previous day’s recovery above 1.3600 following the comments.