BOC’s Macklem: We are seeing clear evidence that higher rates are working

  • The exchange rate is part of how monetary policy works
  • Normally large rate hikes boost the currency but because the US is also hiking, the currency has been relatively stable
  • We don’t target the exchange rate but we take it into account
  • We are seeing clear evidence that higher rates are working
  • We left the door open to higher interest rates, if needed
  • We need to see clear downward momentum in core inflation
  • There could certainly be two or three quarters of negative growth
  • A path to a soft landing in Canada is narrower vs USA
  • Highlights the difference between US and Canadian mortgage markets
  • Rogers: Relative to interest rates, we’re not seeing the drop in housing prices we’d expect
  • Rogers: Canada continues to suffer from a lack of housing supply
  • Rogers: We’re paying very close attention to the mortgage-renewal cycle
  • Rogers: Will look more at housing in November Financial System Review
  • Government spending doesn’t look like it’s been adding undue inflation pressure in the past year
  • It’s easier to get inflation down if governments and central banks are moving int he same direction
  • Now is not the time to discuss reductions in the overnight rate
  • Says he wouldn’t use the term ‘stagflation’
  • The risks that oil could go a lot higher have increased

This article was written by Adam Button at Source