US Markets

Central bank chief says Canadians should not 'overreact' to temporary inflation

Credit: REUTERS/Blair Gable

Bank of Canada Governor Tiff Macklem, writing in a column for the Financial Post newspaper on Thursday, said Canadians can be confident that the cost of living will not rise out of control as the economy reopens from the COVID-19 pandemic.

Adds details on June inflation, background

OTTAWA, July 29 (Reuters) - Bank of Canada Governor Tiff Macklem, writing in a column for the Financial Post newspaper on Thursday, said Canadians can be confident that the cost of living will not rise out of control as the economy reopens from the COVID-19 pandemic.

"The Bank of Canada remains firmly committed to keeping inflation low, stable and predictable," Macklem wrote. "You can be confident that we will keep the cost of living under control as the economy reopens."

Canada's inflation rate slowed more than expected in June to 3.1%, down from a decade-high 3.6% in May, data showed on Wednesday, but some analysts said it might be only a brief reprieve.

It was the third consecutive month that inflation remained above 3% - the top of the bank's 1%-3% control range. In the newspaper column, a medium rarely used by the Bank of Canada, Macklem said inflation will be back within the target range by next year.

Macklem reiterated the bank's position that current inflation pressures are due to temporary factors, such as supply constraints and the comparison to last year's low price levels - both caused by the pandemic.

"All these factors have driven prices up, but none of them are likely to last. So, we shouldn't overreact to these temporary price increases," he wrote.

(Reporting by Steve Scherer Editing by Kevin Liffey and Frances Kerry)

((steve.scherer@thomsonreuters.com; +1-647-480-7889;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More