Former Bank of Canada governor David Dodge says the current head of the central bank made the right decision to increase the key interest rate as quickly as he did in an effort to staunch inflation.
In an interview on CTV’s Question Period with Joyce Napier airing Sunday, Dodge said many central banks misjudged the speed of recovery following the early days of the COVID-19 pandemic, so they took too long to make significant interest rate increases they needed to keep inflation low.
Bank of Canada Governor Tiff Macklem said during a press conference on Wednesday Canadians can expect additional increases before the end of the year. He added the Canadian economy is slowing down, but he stopped short of using the word “recession.” But Dodge disagrees. He said while the final objective remains the same — to likely hit 4 or 4.25 per cent by the end of the year — Macklem made the right decision to opt for rapid increases.
Dodge also stressed as the important thing is “not to allow inflation to become entrenched,” as talk of a looming recession continues amongst experts.
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