Canada faces its own set of economic challenges and its central bank is setting interest rates accordingly, the Bank of Canada's senior deputy governor said Thursday after the central bank held its key interest rate steady for the first time in a year, diverging from the U.S. Federal Reserve.
Canada faces its own set of economic challenges and its central bank is setting interest rates accordingly, Carolyn Rogers said as the Bank of Canada and U.S. Federal Reserve appear to be charting different paths.
Her comments come one day after the central bank held its key interest rate steady for the first time in a year, diverging from the U.S. Federal Reserve, which has signalled more rate hikes are to come. Rogers said what started off as a run-up in prices caused by high commodity prices, a surge in global demand for goods and disrupted supply chains then became a domestic phenomenon as the Canadian economy got overheated.
At the same time productivity growth is one of the lowest, and Canadian households are some of the most indebted in the G7. In a question-and-answer period after her speech, Rogers said there's "no question" that what happens in the U.S. economy has implications for Canada. Though the central bank expects to hold its interest rate steady, it has made it clear that the pause is conditional on the economic performance and inflation cooling as expected."If economic developments unfold as we projected and inflation comes down as quickly as we forecast ... then we shouldn't need to raise rates further," Rogers said.
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