The Globe and Mail reports in its Thursday edition that with every new inflation report, the job facing the Bank of Canada gets that much harder. The Globe's David Parkinson writes that the rising tide of inflation is pressing the BOC to respond with bigger and faster interest-rate increases. As the task of stomping down inflation continues to grow, it may take more luck than skill to get there.
BOC senior deputy governor Carolyn Rogers says: "The most important thing is to get inflation back to target. Of course, we want to do that with the least amount of unintended consequences as possible. That's what we're aiming to do, that's why we're increasing rates. That's why we're doing it quickly."
The May inflation report, published Wednesday by Statistics Canada, probably cemented a 75-basis-point rate hike by the BOC at its next rate decision in mid-July -- which would be the bank's biggest single rate increase since 1998.
The BOC has said repeatedly it wants to quickly get its key rate at least up to levels it considers "neutral."
The U.S. Federal Reserve is also scheduled to set its key rate two weeks after the BOC's July announcement, and looks poised to make its own jump to 2.5 per cent.
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