Quote:
Originally Posted by Slava
It doesn't look like it, but it's complicated. Supply issues were driving things, and those are easing (or have eased). It just takes time to get this worked through the system though. Things like fuel/gasoline have dropped significantly over the past few months. Housing/shelter haven't dropped as much. A couple of the large grocery CEO's in Canada say that prices should ease on that front as well, which is generally a positive for people.
Those are the types of things that the central bank would have the central bank ease their foot off the pedal, regarding rate hikes...but none of the comments are particularly dovish on that front, at least not yet.
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Some of the non-interest rate measures they're taking to reduce inflation will also tend to impact interest rates as a side effect. For instance, the Bank of Canada bought hundreds of billions of dollars of government bonds in 2020 which they're slowly letting mature and not repurchasing. That will lead to lower liquidity and a slight constriction of the money supply, as other investors will use liquid cash to purchase the replacement bonds. But that leads to rising bond yields, as those investors have to have attractive enough yields to warrant purchasing them. While bond yields aren't necessarily directly tied to overnight lending rates, they usually move in lockstep.
And beyond anything happening in Canada, we do also have to largely mirror what the US is doing unless we want our currency to tank (see Japan recently).