(Ottawa) Former Bank of Canada Governor Stephen Poloz says the effect of interest rate hikes will be bigger than most people realize.
Speaking at a conference in Ottawa hosted by Western University’s Ivey Business School, the former governor warned Thursday that today’s economy is more interest rate sensitive than it once was. was 10 years ago.
Poloz estimates that annual inflation will fall on its own to around 4% as external factors, such as rising commodity prices, subside.
Political action will have to do the rest of the work, he said, to bring inflation back to the central bank’s 2% target.
Poloz defended the use of the word “transient” to describe inflationary pressures, noting that international contributors to inflation were already dissipating.
However, he pointed out that it would take time for this development to be reflected in annual inflation.