Hike rates

Bank of Canada must raise rates to control inflation – BoC Governor

OTTAWA, Sept 26 (Reuters) – Inflation is too high in Canada, so the Bank of Canada needs to raise interest rates to slow spending and give the economy time to catch up, the Bank said on Monday. Governor Tiff Macklem in a video posted by Central. bank on Twitter.

“Inflation is too high,” Macklem said in a video tagged #AskTheBoC, echoing remarks made earlier this month after the central bank raised its benchmark rate by 75 basis points to 3.25% . Read more

“It’s important that we bring inflation down so that Canadians can plan their spending and savings, and not be surprised by big changes in their cost of living.”

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The Bank of Canada, like many of its peers around the world, is rapidly raising interest rates in response to inflation reaching levels not seen in decades.

But the bank has come under public criticism for raising borrowing costs at a time when many Canadians are already struggling to afford groceries and other essentials.

“It’s by raising interest rates that we’re going to slow spending in the economy, give the economy time to catch up, and dampen inflation,” Macklem said in the video. “It will bring inflation down.”

The central bank has raised rates by 300 basis points in just six months as it seeks to bring inflation back to the 2% target. Canada’s inflation rate edged down to 7.0% in August from 8.1% in June and 7.6% in July. Read more

The Canadian dollar weakened to its lowest level since May 2020 at 1.3808 for the greenback, or 72.42 US cents, before recovering some of its decline, as well as widespread volatility in currency markets.

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Reporting by Julie Gordon and Ismail Shakil in Ottawa, additional reporting by Fergal Smith in Toronto; Editing by Chizu Nomiyama and Andrea Ricci

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