The Bank of Canada expects inflation to go \u0022a little over\u0022 8%, as soon as next week, Tiff Macklem said in a transcript released Friday.
Macklem, who spoke to the Canadian Federation of Independent Business the day after Wednesday’s shock 100-basis-point interest rate hike, also urged small business owners to avoid building the current pace of price increases into their contracts.
Canadian inflation was 7.7% in May, the highest since January 1983. Analysts surveyed by Reuters expect June inflation to hit 8.3%, which would be the highest since 1982. The data will be released on Wednesday at 8:30 a.m. ET. Canadian Deputy Prime Minister Chrystia Freeland, who also serves as finance minister, on Saturday said the federal government was responding by “not pouring fuel on the flames” through its budget and by tackling some of the drivers of inflation as well as labor and housing policies.
Macklem also made clear the bank is very concerned about a wage-price spiral, where businesses raise wages to keep workers and then pass the higher costs on to households, who then want higher wages to compensate for inflation.
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