BoC Deputy Governor Toni Gravelle said yesterday, “our policy rate, at 1%, is too stimulative, especially when inflation is running significantly above the top of our control range. We need our policy rate to be at more neutral levels.”
“Simply put, with demand running ahead of the economy’s capacity, we need higher interest rates to cool domestic inflation. And as we’ve said before, the economy can handle it,” he said.
Still he noted that outlook remained unusually uncertain and therefore it’s not easy to hike by 75bps in one go.
