In his post-BoC policy announcement/Monetary Policy Report release press conference on Wednesday, Governor Tiff Macklem said that interest rates will have to go up to counter inflation. Canadians should expect a rising path of interest rates, given the BoC is committed to bringing inflation back to target. 

Additional Remarks:

“There is some uncertainty about how quickly inflation will come down because we’ve never experienced a pandemic like this before.”

“Unevenness across sectors remains, but taking all the evidence together, the governing council judges the economy is now operating close to its capacity.”

“Some evidence that supply disruptions may have peaked, but the spread of omicron is a new wildcard that could further disrupt global supply chains.”

“We also considered the potential for some reversal of the large price increases for goods; this would pull inflation down more quickly than we forecast.”

“Rising house prices and evident capacity pressures suggest that if demand continues to grow faster than supply this will put upward pressure on inflation.”

“We were mindful that the rapid spread of omicron will dampen spending in the first quarter… so we decided to keep our policy rate unchanged today.”

“Removing forward guidance is a significant shift in monetary policy, and we judged that it is appropriate to move forward in a deliberate series of steps.”

“Bank will keep holdings of Canadian government bonds on our balance sheet roughly constant at least until we begin to raise the policy interest rate… at that time, we will consider exiting the reinvestment phase.”