By Julie Gordon

OTTAWA, Reuters – The Bank of Canada won’t raise its benchmark rate until there is a reduction in Canada’s economy, as Governor Tiff Macklem stated in a Monday newspaper opinion piece.

Macklem noted, too that inflation risks are increasing due to pandemic-induced demand shiftings, supply disruptions, and higher energy prices. However the central bank still views the current dynamics as temporary.

Our forward guidance stated that the policy rate will be unchanged until there is enough economic recovery. Macklem said in an editorial for Financial Times that while we’re not yet there, it is getting closer.”

He said that Canada’s central bank policy framework, which is a flexible inflation target centered on the 2% middlepoint of a 1-3% range, allows Canadians to be certain that inflation will remain under control and support a complete recovery.

Our resolve means that we can be wrong about inflationary pressures persisting and the amount of slack remaining in the economy. We will adapt. Macklem explained that the framework allows them to achieve this goal.

At year-end, the Bank of Canada’s inflation target will expire. Work is underway to determine, together with the Liberal-led federal Government, whether the existing framework should be maintained or if it can be replaced.

On Sunday, the main opposition Conservatives called for an immediate renewal of this target in light of rising inflation.

As countries recover from the pandemics, inflation is rising. This puts pressure on supply chains around the globe. Canada’s inflation rate rose from 4.4% to 4.7% in September to reach 4.7% in October. This data is due Wednesday.

Although the Bank of Canada suggested last month that their first rate increase could occur as soon as April 2022 (though money market bets are on a March rise with a total of five for 2022),

Canadian dollars traded 0.2% lower at 1.2517 against the greenback (79.89 U.S. Cents).