Macklem spoke to the Canadian Press

Macklem spoke to the Canadian Press

The Canadian dollar hasn't reacted after an interview with Macklem was published. His comments largely repeat what he said yesterday after the MPR.

"As we reopen the economy there are some imbalances," he said, adding that "supply doesn't respond at exactly the same pace as demand and so you get some sharp price movements.

"We think those are temporary, we think those will work their way out," Macklem told The Canadian Press on Wednesday after the release of the bank's updated economic and inflation outlook.

"But if they don't, and if we start to think that inflation will remain above our target range, we have the mandate, we have the tools and we will control inflation. We will get it back to target."

Macklem underscored that the BOC won't necessarily hike rates in H2 2022 when the output gap is closed.

"Once we get there, we're going to have to assess what's needed. It's not automatic that we would raise interest rates. We'll have to see what's needed," he said. "But Canadians will certainly have a good idea as we get closer and closer to that point."

Full report.

USD/CAD is up 40 pips on the day to 1.2544.