Canada: Rising inflation biggest challenge to Central Bank

Pressure is beginning to mount on Bank of Canada Governor, Stephen Poloz, as some industry experts predict both inflation and growth will surpass 2%, an event that hasn’t occurred since 2014.

According to the Head of Rates Strategy at CIBC, Ian Pollick, “what makes the Bank of Canada uncomfortable is inflation that is north of target at a time where growth isn’t necessarily that different from trend… that’s an environment where they’ll be forced to do something.”

Economists believe that inflation will average 2.3% in Q2 and 2.4% in Q3, with RBC projecting an average Q3 inflation rate of 2.9%.

Mark Chandler, Head of Fixed Income Research for RBC Capital Markets believes these numbers “sharpens the debate a little bit”.

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