The Globe and Mail reports in its Wednesday, April 28, edition that Bank of Canada Governor Tiff Macklem is not worried about a temporary spike in inflation.
The Globe's Mark Rendell writes that Mr. Macklem, in an appearance before the House of Commons finance committee on Tuesday, was grilled about the BOC's inflation outlook.
The bank expects inflation to hit 3 per cent in the coming months, before dropping down closer to 2 per cent later in the year. Mr. Macklem said this "blip" is largely the result of year-over-year comparisons for prices, such as gasoline or airfares, which took a major hit last spring. He said: "Monetary policy takes time to work. It doesn't make sense to overreact to temporary factors that are going to work their way out. But if we saw that inflation was sustainably higher than forecast, and sustainably higher than our target, yes, we would react, and we have the tools and we know how to control inflation."
Mr. Macklem's appearance followed the BOC's first significant step toward unwinding its ultra-stimulative monetary policy. Last Wednesday, it said it would reduce its pace of federal government bond-buying to $3-billion a week from $4-billion a week.
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