Bank of Canada forecasts higher inflation

The Governor of the Bank of Canada, Tiff Macklem, stated that the bank expects a significant increase in inflation expectations this month, due to the ongoing rise in oil and petroleum products prices, continued conflicts in the Middle East, a decline in oil shipments, and damage to refinery capacities. These factors heighten the risks of sustained inflation and a longer period of elevated inflation levels. He confirmed that the bank’s main goal is to keep inflation around 2% in the long term, and that the bank stands ready to adjust monetary policy if necessary. The market indicates a possibility of raising interest rates by a total of 100 basis points over the next year. He explained that rising energy costs make it more challenging for central banks to control inflation, and that the bank will focus on assessing whether inflation will decline automatically or if interest rate hikes will be needed to achieve the target.

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