Bank of Canada’s key interest rate hike is set to take place soon due to rising inflation in the country.
Bank of Canada Governor Tiff McClelland made at least the same point in his speech to the Canadian Chamber of Commerce on Wednesday.
“We have a responsibility to bring inflation to a low, stable and predictable rate so that Canadians can confidently plan and invest,” Maclem argued, adding that inflation in the country reached 4.8% in December (5.1% in Quebec), well above the 2% target.
Thus, the Bank of Canada still expects to raise its key rate to 0.25% since the outbreak in March 2020.
“As the pandemic recedes, economic conditions need to be normalized across the board and the pressure on world commodity prices eased. Inflation will fall relatively quickly in the second half of 2022 and fall to almost 3% by the end of the year,” Mr Maclem argued.
In addition, if the Canadian economy, overall, is to recover well from the epidemic, companies will need to do more to ensure their stability.
On the whole, the governor explained that the employment rebound in Canada was higher than in the United States after the first detention, but that American employees noticed a greater increase in their working hours.
“So we can say that the recovery of the labor factor in the two countries is very similar. The difference is on the productivity side.
According to him, American companies are more willing to invest in their human capital and technology during the epidemic than in Canada.
Hence the need for Canadian companies to hold on, which is not impossible.
“According to our recent Business Outlook survey, 62% of respondents say they expect to increase their spending on machinery and equipment in the coming year compared to last year. This level has not been seen since we started this research in 1999,” the governor underlined.
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