Inflation has fallen, so why hasn't the Bank of Canada backed off rate hikes?

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Inflation has fallen, so why hasn't the Bank of Canada backed off rate hikes?
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Canada\u0027s inflation rate has returned to the country\u0027s target range after a tumultuous couple of years of soaring prices.

Though the decline in inflation was praised by governor Tiff Macklem, he also issued a warning that the central bank is ready to raise interest rates further if needed.Given the progress made so far, the Bank of Canada’s hawkishness might seem confusing: why raise interest rates even more when inflation has fallen so significantly?

The central bank has been adamant that it’s aiming for two per cent inflation: not more and not less. That’s because core measures of inflation — which strip out volatility and are better at gauging underlying price pressures _ are still high. And with the economy so far outperforming what the central bank and forecasters were anticipating for 2023, the Bank of Canada says it felt it needed to take rates higher.

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calgarysun /  🏆 63. in CA

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