Rising exchange rates add financial ‘burden’ but necessary to fight inflation: Bank of Canada – Country

A senior official at Bank of Canada admitted in a statement on Thursday that the positive rise to its benchmark interest rate This year is increasing the pressure on Canadian households, but needs to keep them going to continue to spread inflationary from becoming “entrenched”.

Senior Vice Governor Carolyn Rogers spoke to a business audience in Calgary on Thursday, a day after the central bank delivered its fifth consecutive rate hike in 2022 – an oversized jump of 75 basis points.

While Rogers admitted in his speech that every year inflation rate fell in July from a probable high last month, she attributed much of the drop to gasoline prices and said the central bank’s core inflation measures remained high and widespread.

“This shows how strong core inflation remains in Canada,” she said.

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Click to play video: 'Bank of Canada raises key interest rate to 3.25%, signals more hikes'

Bank of Canada raises key interest rate to 3.25%, signaling further hikes

Bank of Canada raises key interest rate to 3.25%, signaling further hikes

Global shipping rates have fallen to about 50% of their levels in September 2021, says Rogers, suggesting dwindling demand could ease strained supply chains.

However, Canadian businesses “have yet to see a major relief in terms of supply,” she said, suggesting a limited impact on inflation so far at home.

While the housing sector has slowed significantly due to rising borrowing rates, she said domestic demand has also remained strong despite rising interest rates, especially in the services sector.

Rogers noted that higher interest rates – the central bank ran fast ahead with a 300 basis point increase in just six months – would take up to two years to have a “full effect” on inflation.

She acknowledged that higher rates are “adding to the burden” many Canadians are facing with rising costs of living, but maintained that raising borrowing costs and cooling the economy is ” necessary to reduce inflation”.

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Rising interest rates, high household debt cause ‘payment shock’ for Canadians

With uncertainty on the global stage – Russia’s war in Ukraine and the COVID-19 pandemic continues to alter economic forecasts – Rogers said the Bank of Canada’s anti-inflation efforts will likely encounter some “bumps along the way” but rates will continue. continues to increase until the organization believes the task is complete.

“We are determined to get this job done,” she said.

– with files from Reuters

Click to play video: 'Another rate hike, but does it really help reduce inflation?'

Another rate hike, but will it really help reduce inflation?

Another rate hike, but will it really help reduce inflation?

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