BoC’s Gravelle: Concerns Over Inflation More Than Usual

Bank of Canada Deputy Governor Toni Gravelle said on Thursday that concerns about upside inflation risks are heightened much more than usual.

“We are likely to react a little bit more readily to the upside risk given it’s already above our inflation-control range”, Gravelle added.

For reference, the bank’s inflation-control range is 1.0%-3.0%. The comments come in wake of remarks from Gravelle earlier in the session.

Gravelle’s comments are hawkish in tone, at the same time the comments are hinting at a proactive BoC response to upside inflation risks, but the Canadian dollar does not seem to have reacted.

The Bank of Canada will leave its inflation target at 2.0%, the mid-point of a 1.0%-3.0% range, in a soon-to-be-announced review of its monetary policy framework. However, the bank will include new language on the importance of employment to the economy.

The upcoming announcement will be a very clear reaffirmation of the centrality of the inflation target.

But it is not a photocopy of last time, there is a little bit of updating to reflect what the bank is already doing, some updating of the language to reflect the consideration the bank is already giving to employment factors.