Inflation is too high in Canada, so the Bank of Canada needs to jack up interest rates to slow spending and give the economy time to pick up speed, Governor Tiff Macklem said on Monday in a video shared by the central bank on Twitter.
“Inflation is too high,” Macklem said in a video tagged #AskTheBoC, mirroring remarks made earlier in September after the central bank lifted its policy rate by 75 bps to 3.25%.
“It is important that we get inflation back down so Canadians can plan their spending and their savings, and they don’t get surprised by big changes in their cost of living.”
The Bank of Canada, like many of its global peers, is rapidly hiking interest rates in response to inflation running at levels not witnessed in decades.
But the bank has received public criticism for raising borrowing costs at a time when many Canadians are already straining to afford groceries and other essentials.
“It is by raising interest rates that we’re going to slow spending in the economy, give the economy time to catch up and take the steam out of inflation,” Macklem said in the video. “That’s gonna get inflation back down.”
The central bank has hiked rates by 300 basis points in just six months as it looks to fight inflation back to the 2% goal. Canada’s inflation rate declined slightly to 7.0% last month from 7.6% in July and 8.1% in June.
The Canadian dollar languished to its lowest level since May 2021 at 1.3808 to the greenback, or 72.42 U.S. cents, before recovering some of its declines, together with broad-based volatility in currency markets.