Bank of Canada ‘getting closer’ to raising interest rates, says Governor Tiff Macklem

In FT editorial, Bank head acknowledges high level of uncertainty over inflation

Bank of Canada Governor Tiff Macklem said his central bank is “getting closer” to raising interest rates as slack in the economy dissipates, in line with the forward guidance officials have been providing all along.

While substantial monetary stimulus is still needed in order for the economy to fully recover, Macklem said his team remains focused on its inflation target at a time when risks associated with price pressures have increased.

“For the policy interest rate, our forward guidance has been clear that we will not raise interest rates until economic slack is absorbed,” Macklem wrote in an opinion piece for the Financial Times published Monday. “We are not there yet, but we are getting closer.”

The language in the article is consistent with recent efforts by the Bank of Canada policy makers to reassure Canadians they are serious about inflation, including a decision last month that saw officials bring forward the timeline for possible interest rate increases to early next year.