BoC's Macklem: We will considering raising rates sooner than we had previously thought

Bank of Canada (BoC) Governor Tiff Macklem said on Wednesday during the press conference he believes there are good reasons for inflation to ease in 2022 and warned that if they see signs of prolonged inflationary pressures, they will take action to bring it back down to target.

Earlier in the day, the BoC left its policy rate unchanged at 0.25% as expected. Additionally, the bank announced that it will end net purchases of government bonds, ending QE and going into the “reinvesting phase”. The central bank will purchase bonds only to replace those that are maturing so the overall holdings remain roughly stable over time.  

“We move forward the timing of when we think we will be considering raising our policy interest rate”, said Macklem. He mentioned they are adjusting and they will continue to adjust to bring inflation back to the 2% target but it will take a bit longer. “This global supply issues, shipping bottlenecks, are proving to be more severe and persistent than expected but there are good reasons for those to ease off”.