Inflation in the coming months is likely to be higher than that projected in the April Monetary Policy Report, mainly due to strong raw materials and the effect of the base year, the deputy governor of the Bank of Canada (BoC), Timothy Lane, according to Reuters.
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“There is a good chance that productivity growth will be stronger than expected, giving the economy more room to grow before inflation becomes a concern.”
“Inflation is expected to fade later in the year as economic slack puts downward pressure.”
“Risks to the inflation outlook identified in April remain relevant; these include a stronger Canadian dollar hitting exports, the potential for more persistent cost pressures to drive inflation.”
“Given the unusually high uncertainty around potential and future growth, we must rely on a wider range of data than usual to assess how much slack there is in the economy.”
“That assessment is key to deciding when to start reducing the monetary policy stimulus.”
“Recent economic data show signs of growing resilience that augur well for the underlying recovery.”
“The economic setback from the third wave of COVID-19 should be temporary; the bank still expects second quarter annualized growth to be close to the 3.5% forecast in April.”
“In recent weeks, there have been signs of moderation in the housing market, but the level of activity remains very high.”
Market reaction
The pair USD / CAD It did not show an immediate reaction to these comments and was last seen losing 0.2% on the day at 1.2087.
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