One former Canadian central banker said interest rates may need to go even higher after the Bank of Canada on Wednesday moved rates to its highest level in 15 years while signalling a potential pause ahead.
“I think there's a good chance that more will need to be done by way of interest rate increases,” said John Murray, senior fellow at the C.D. Howe Institute and a former deputy governor at the Bank of Canada, in an interview with BNN Bloomberg Wednesday. Wednesday by 25 basis points, bringing the overnight policy rate to 4.5 per cent. The rate hike marks the eighth consecutive increase from the Canadian central bank. from the Bank of Canada that it will hold its policy rate at 4.
However, Murray said these stop-and-start rate hikes could deliver “more pain than might otherwise be necessary” when compared to a more steady course. “I just worry about a process that may in the end be a little too ‘stop-go,’” he said.The 25-basis-point rate hike by the Bank of Canada was the correct move and that a failure to make that move would be concerning, according to Murray.
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