The Financial Post reports in its Thursday, April 22, edition that the Bank of Canada will begin mulling an interest-rate increase in the second half of next year instead of waiting until 2023.
The Post's Kevin Carmichael writes that the BOC had mostly emptied its armoury fighting the crisis by the time Tiff Macklem took over as governor in June. However, one weapon from the Great Recession had not yet been used: an explicit promise to keep the official interest rate pinned near zero for a conditional period of time.
Central bankers prefer to shroud their plans in a certain amount of ambiguity to ensure traders base their decisions on economic conditions, not the direction of monetary policy. However, at times of extreme uncertainty, a pledge to keep interest rates low can help settle nerves. Mr. Macklem decided to give it a try.
In July, the BOC said the benchmark lending rate would stay at 0.25 per cent "until economic slack is absorbed so that the two per cent inflation target is sustainably achieved."
The BOC outlook now suggests policy-makers are poised to achieve their inflation goals by the second half of 2022. Mr. Macklem said he will not feel obliged to immediately raise interest rates.
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