• Further rate decisions will be guided by assessment of incoming data and outlook for inflation.
• Monetary policy is working but underlying inflationary pressures are proving more stubborn.
• Higher interest rates are needed to slow growth of demand in the economy and relieve price pressures.
• Labor market remains tight, even if there are some signs of easing.
• Bank of Canada is prepared to raise rates further – Governor Tiff Macklem.
• We are trying to balance the risks of under and over tightening monetary policy.
• If we don’t do enough now we’ll likely have to do even more later.
• Governing council’s decision to raise the policy rate reflected persistence in both excess demand and underlying inflationary pressures.
• Consensus in governing council was that monetary policy needed to be more restrictive to bring inflation back to 2% target.
• Governing council did discuss possibility of keeping rates unchanged, but cost of delaying action was larger than the benefit of waiting.
• With increases in policy rate in June and July, our outlook has inflation going gradually back to 2% target.