Bank of Canada now eyeing 'corporate pricing behaviour' in its inflation fight
More than a year into its interest rate hiking cycle, the Bank of Canada has set its sights on “corporate pricing behaviour” in its battle with inflation – a shift economists say is noteworthy, though it’s not yet clear how the bank is viewing the role of corporate profits in today’s elevated consumer prices.Wednesday statement on its decision to raise interest rates a quarter of a percentage point to 4.
“I think it indicates that the Bank of Canada has recognized that corporate pricing and profit strategies have played a role in our current inflationary upsurge,” Stanford, director at the Centre for Future Work, told BNNBloomberg.ca in a telephone interview. “It’s cold comfort in a way that the bank has acknowledged profits might be the problem, but they're still using high interest rates, which is aimed clearly at work and wages, to solve the problem,” he said.
However, St-Arnaud cautioned that the central bank doesn’t appear to be taking a clear stance on what it thinks is happening with corporate pricing and inflation, nor is it explicitly acknowledging concerns about possible “price gouging” that have arisen as Canadians contend with higher prices in grocery aisles.
Stanford also noted that discussions about the correlation between corporate profits and inflation have become more mainstream around the world.
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