In his post BoC monetary policy announcement press conference on Wednesday, Governor Tiff Macklem said that if demand responds quickly to higher rates, and inflationary pressures moderate, it may be appropriate to pause hikes once we get closer to the neutral rate, reported Reuters.
Additional Remarks:
- On the other hand, the BoC may need to take rates modestly above neutral for a period to bring demand and supply back into balance and inflation back to target.
- Canadians should expect rates to continue to rise towards more neutral settings and the current estimate is that this is between 2% to 3%.
- "We need higher interest rates," he said, adding that the economy can handle them and reiterating that the BoC will act forcefully if need be.
- The impact of the Russo-Ukraine war on growth in Canada is likely to be small.
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