Bank of Canada ‘committed to finishing the job’ on inflation: Macklem

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Uneven economic growth in countries around the world may mean interest rates are brought down on differing schedules after a “forceful” run-up in the past couple of years to rein in inflation, Bank of Canada governor Tiff Macklem said Friday.

“It’s important that nobody mistake different timing of interest rate moves with differences in objectives,” said Macklem, who is in Washington for meetings of the International Monetary Fund.

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“We’ve all made a lot of progress to get inflation (down), we are all committed to finishing the job. Exactly what that looks like may be different in different counties.”

He singled out recent surprising economic growth and inflation numbers in the United States, and said markets are already baking different scenarios into asset prices with no signs of troubling volatility.

“That … is not creating any problems. Markets are functioning well,” Macklem said, noting that flexible exchange rates help absorb differences. “They’re adjusting and the adjustments have been relatively smooth.”

On the geopolitical front, Macklem said tensions remain high, with the latest escalation in the Middle East resulting in oil price volatility that the bank is watching.

“There is no question that this is a source of deep concern in the international community,” he said. “I expect we will continue to see volatility as events play out. Unfortunately, that’s inevitable. If there is a spike in oil prices that’s something we’ll have to take into account.”

He said Canada’s central bankers prefer to be guided by inflation measures that strip out highly volatile elements such as energy prices, but they will be keeping a close on the situation to ensure progress made to tame inflation isn’t lost.

“We are wary of upside risks,” he said.

• Email: bshecter@nationalpost.com

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