Bank of Canada leaves room for more excessive rate increases

A top Bank of Canada official said on Thursday that the institution continues to believe that front-loading is the best strategy for combating the fastest-rising prices in nearly four decades.

In response to queries from reporters during a speech in Calgary, Alberta, Senior Deputy Governor Carolyn Rogers said the bank will make future choices based on “the facts we have in front of us at the moment.” At a 14-year high, the Bank of Canada increased its policy rate on Wednesday and issued a warning that further tightening was imminent. Rogers’ response, when asked if Canada has reached the end of the period of excessive rises, was: “We have stated and continue to say that we think front-loading is the best method to deal with the underlying drivers of inflation and to navigate towards that gentle landing that we desire.”

She reiterated that the goal was to reduce demand without starting a recession and that the central bank was seeing some “early indicators that monetary policy is working,” but she also made it plain that there was still work to be done. According to Rogers, “The bank still sees a way to a soft landing, and that’s still our aim.” The headline inflation rate in Canada decreased from 8.1% in June to 7.6% in July, while the core inflation gauges all increased and was at or above 5%, Rogers said earlier in her speech.