Bank of Canada says strong demand could drive up inflation

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OTTAWA — The Bank of Canada said Tuesday that if domestic demand is allowed to get too far ahead of supply, it could risk pushing inflation even higher, which is at its highest level in 31 years and more than three times higher. objective of the bank.

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Senior Deputy Governor Carolyn Rogers, in her first speech since joining the board in December, said interest rates are expected to rise. His remarks did not mention that the bank might need to act “forcefully,” a concept central bank officials have used in recent appearances.

“With the Canadian economy starting to overheat, we can’t let demand get too far ahead of supply or we risk making inflation even worse,” she told a women’s group. business in Toronto.

“Interest rates remain low, but they are rising and will have to rise,” Rogers added. “The increase in the policy rate will help moderate spending and bring inflation under control.”

Rogers pointed to global supply chain bottlenecks and high commodity prices as the main drivers pushing Canada’s inflation rate to “close to 7%,” well above the control rate of 1-3% and the Bank of Canada’s 2% target.

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