- Because we are in a period of excess demand, we need a period of lower growth to balance things out and bring demand back in line with supply.
- Reiterates that BOC judges policy rate will need to rise further
- Recent data show inflationary pressures in Canada are increasingly broad based
- Getting inflation all the way back to 2% will take some time, there could be bumps along the way
- Governing Council discussed risks that inflation could be entrenched
- There is a risk consumer spending has more momentum than we expect
- We’ll be keeping a close eye on how global developments and commodity prices affect our exports and business investment as well as how this translates into pricing decisions
- We’ll be watching to see if supply disruptions are improving
- We will not rest easy until we can get inflation back to target
This is hawkish stuff and indicates that the BOC is likely to get to 4% with a good chance of getting above. What we were looking for from this speech was a hint about how much is coming at the next meeting or the terminal rate but we're left to use our imagination. Still, I expect we'll be seeing Canadian bank economists raising BOC forecasts in the day ahead.