OTTAWA (Reuters) -The Bank of Canada needs to hike interest rates further to fight stubbornly high inflation, Governor Tiff Macklem said on Tuesday, reiterating that “we are getting closer, but we are not there yet.”
In opening remarks to the Senate’s banking, trade and economy committee, he said the central bank was still far from the goal of low, stable and predictable inflation.
Last week the Bank of Canada announced a smaller-than-expected interest rate hike and forecast the economy would stall over the next three quarters.
“How much further (rates rise) will depend on how monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding to this tightening cycle,” Macklem said on Tuesday.
“The effects of higher rates will take time to spread through the economy. … There are no easy outs to restoring price stability.”
Inflation in Canada has slowed to 6.9% from a peak of 8.1%, but core measures remain broad-based and persistent. The central bank revised its inflation outlook a touch lower and said it sees a return to the 2% target by end-2024.
(Reporting by David Ljunggren and Julie Gordon; Editing by Leslie Adler)
