Lane: BoC will be forceful in using tools to combat inflation

Bank of Canada Deputy Governor Timothy Lane said on Wednesday that the central bank will be nimble and, if necessary, forceful in using its monetary policy tools to tackle inflation, according to Reuters.

We are alert to the risk that inflation may again prove more persistent, he continued, adding that we must anticipate the possibility of more surprises before the pandemic ends.

Currently, with inflation well above our target, Lane added, we are increasingly focused on countering the upside risks and, at different stages of the pandemic, we have changed our outlook and policy stance to respond to the uncertain and fast-changing situation.

Lane reiterated that the BoC expects supply disruptions to ease and inflation to come down quickly in the second half of the year, adding that rates will need to be on a rising path.

USD/CAD has not reacted yet to the latest hawkish leaning comments from Lane, which will do little to dampen speculation that the BoC could be tempted to lift interest rates by 50bps at its meeting next month.