The Globe and Mail reports in its Friday edition that the Bank of Canada is playing down concerns about inflation.
The Globe's Mark Rendell writes that the BOC expects inflation to stay near 3 per cent for several months before falling back toward its 2-per-cent target later this year, deputy governor Tim Lane said in a speech Thursday that laid out the bank's rationale for its rate decision on Wednesday.
Above-target inflation is largely the result of temporary factors that will dissipate over time, he said.
"These base-year effects are, by definition, transitory -- they will not persist beyond the next few months. What will persist until we see a complete recovery is the underlying slack in the economy," he said.
Canada's most recent inflation reading for April saw the Consumer Price Index jump 3.4 per cent year-over-year.
There are factors that could push inflation persistently above the bank's forecast, Mr. Lane said, pointing to high commodity prices, supply-chain disruptions for products such as semi-conductors and wage pressures resulting from the difficulty of finding workers. He said, however, that "these supply-chain bottlenecks will likely become unblocked as things normalize."
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