Searing Canadian inflation report shows supply pressures persist -Macklem


Bank of Canada Governor Tiff Macklem attends a news conference in Ottawa, Ontario, Canada April 13, 2022. REUTERS/Blair Gable

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TORONTO, April 21 (Reuters) – Bank of Canada Governor Tiff Macklem said on Thursday supply pressures showed no signs of easing and the central bank would monitor the impact of the rate hike. interest rate on inflation to gauge how much it should tighten policy.

Disruptions to supply chains have increased global price pressures, with data on Wednesday showing Canada’s inflation rate accelerating to a 31-year high of 6.7% in March.

“These supply disruptions, there’s really no sign of them easing,” Macklem told reporters at a virtual press conference after attending G20/IMF meetings in Washington.

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“We know that not only is war further disrupting already fragile supply chains. COVID lockdowns in China are creating a new level of uncertainty.”

The Bank of Canada last week raised its benchmark rate by half a percentage point, its biggest hike in more than two decades, and opened the door to an interest rate hike above a neutral framework, which she estimates between 2% and 3%, for the first time in 14 years. His next political decision is expected on June 1.

When deciding how much to raise interest rates, the central bank will consider the impact of its tightening on household spending and inflation, using quarter-on-quarter annualized inflation rates. other as a first indicator.

“If we start to see domestic demand pressures start to moderate and we start to see those international price pressures ease, you should see those quarter-over-quarter inflation rates start to to lower.”

The central bank forecast last week that annualized quarter-over-quarter inflation would decline from around 6% in the second quarter to around 2.5% in the fourth quarter.

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Reporting by Fergal Smith; Editing by Sandra Maler

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