Macklem Q&A: We believe there are good reasons for inflation to ease in 2022
Comments from Macklem in response to questions from reporters:
- Inflation likely to move a bit higher late this year, nearing 5% before falling to around 2% by the end of 2022
- We have never reopened an economy before
- Strong demand plus bottlenecks has put considerable pressure on traded goods
- Shift to buying services will take some pressure of goods prices
- We don't need QE anymore, we're getting closer to a full recovery
- Package of monetary policy tools have worked
- Supply capacity of economy is more limited than we thought
- Our assumption is that 20% of excess savings accumulated during pandemic will be spent, the rest will be used as savings and to pay down debt
- We will soon get a sense of whether spending is higher or lower than assumptions
He has repeatedly highlighted that inflation is a global issue, which also trying to say the BOC has the power to bring inflation back to target.
With the press conference done, I can't say we learned anything new.