BoC's Macklem: Governing Council agreed to look through the war’s near-term impact on inflation but if energy prices stay high, we will not let their effects become broad-based persistent inflation.
- "Raising rates to dampen inflation could further slow the economy. Easing rates to support growth increases the risk that higher inflation becomes persistent. For now, holding the policy rate unchanged balances those risks." adds "However, uncertainty is unusually elevated, and the risks could shift. Monetary policy may need to be nimble."
- Referencing elevated oil prices and market pricing: "Based on this, we expect CPI inflation to hover close to 3% in coming months before easing gradually toward 2%. We will be watching closely for evidence of a broadening in price pressures"
- "If the United States imposes significant new trade restrictions on Canada, we may need to cut the policy rate further to support economic growth. Alternatively, if the conflict in the Middle East continues and higher energy prices start leading to ongoing generalized inflation, monetary policy will have more work to do—there may be a need for consecutive increases in the policy rate."
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