Macklem: BoC prepared to hike rates if inflation persists

The Bank of Canada´s Governor Tiff Macklem said in a prepared speech at the Toronto Region Board of Trade that if they start to see signs that inflation is likely to get stuck materially above their 2% target, they are prepared to raise interest rates further. The BoC decided to pause interest rate hikes in March.

The USD/CAD is trading at weekly lows, under 1.3543 on Thursday, with the Canadian dollar outperforming during the US session.

“We’re forecasting inflation to fall quickly to about 3% this summer and to reach the 2% target near the end of 2024. The projected decline from 3% to 2% is both slower and more uncertain. With growth anticipated to be weak through the rest of the year before picking up gradually next year, we expect services price inflation to ease and overall inflation to converge on the 2% target. But several things still have to happen for services price inflation to moderate in line with our forecast, and we are watching these closely”, Macklem added.