On November 22nd, Governor Tiff Macklem highlighted the challenges posed by high inflation and outlined the Bank of Canada’s commitment to addressing the issue. Macklem emphasized the importance of staying the course in the fight against inflation, despite the short-term difficulties faced by Canadians.
The governor acknowledged the tangible impacts of inflation on families, businesses, and communities. He pointed out that while the Canadian economy has shown resilience post-COVID-19, high inflation rates have led to increased hardship for many citizens. Macklem shared insights from surveys and direct correspondence, revealing the frustration and desperation expressed by Canadians struggling to cope with rising prices.
Governor Macklem stressed that the Bank of Canada’s primary concern is the pain inflicted by high and volatile inflation on Canadians. He acknowledged that the recent interest rate increases, while effective in curbing inflation, may feel like an additional burden for many. However, Macklem reassured that staying the course in the fight against inflation is essential for long-term economic stability.
Drawing parallels with the challenging inflationary period of the 1970s, Macklem highlighted the crucial differences this time around. He pointed to the Bank’s successful inflation targeting strategy, which has kept inflation expectations anchored for over 30 years. The governor also emphasized the forceful response to inflation, with interest rate hikes and a commitment to further adjustments if necessary.
While acknowledging the current economic slowdown and the difficulties imposed by higher interest rates, Macklem emphasized that the alternative—a prolonged period of high inflation followed by a deep recession—is far worse. He urged Canadians to remain patient, assuring them that the eventual return to low inflation will bring stability, predictability, and confidence to budget and invest.
In conclusion, Governor Tiff Macklem emphasized the importance of perseverance in the face of short-term challenges. The commitment to restoring price stability, backed by the Bank’s track record and forceful response, will guide Canada through the current period of economic adjustment toward a future of low inflation and stable growth.