Bank of Canada governor says interest rates need to rise further

M^me Rogers and Bank of Canada Governor Tiff Macklem appeared before the Senate Banking Committee on Tuesday evening and answered senators’ questions about the bank’s monetary policy and finances.

In his opening remarks, Mr Macklem reiterated the need for higher interest rates to calm inflation, but said the cycle of monetary tightening was coming to an end.

Officials were asked if the government could play a role in combating hyperinflation and in response, M^me Rogers said policies that address supply-side problems could help reduce inflation.

M^me However, Rogers said such policies would be complements to interest rate hikes, not substitutes.

“We have to do our job, other decision makers have to do theirs,” she said.

Six increases

Last week, the central bank raised interest rates for the sixth time in a row this year, raising its key rate by half a percentage point and signaling that rates could rise further.

Canada’s annual inflation was 6.9% in September, but has been decelerating since hitting the year’s highest rate of 8.1% in June.

The Bank of Canada also released its monetary policy report last week, indicating that the Canadian economy is headed for a significant slowdown towards the end of the year and into the first half of 2023.