Bank of Canada Governor Says 1970s Type Stagflation Will Not Be Repeated

    After handing out the most significant interest rate hike in 22 years in Canada, Governor Tiff Macklem had a message for investors that said there was no reason to panic about inflation getting out of hand. 

    The inflation will be under control

    Macklem told Bloomberg News that despite the global economic uncertainty, he was sure that the policymakers would not repeat 1970s types of stagflations

    According to Macklem, the central bankers globally have allowed inflation to get high and are now adjusting policy quickly after learning the hard lessons. 

    Macklem delivered a half percentage point rate increase to bring down inflation from a three-decade high. He feels many things have changed since the 1970s, and Central banks are much ahead of what they used to be.

    Macklem’s rate hike decision to the policy rate of 1% in Canada was carried out on the same day New Zealand central bank also official rate by 0.5 % point to 1.5%. A hawkish policy is also expected in the U.S. Federal meeting in May, where Fed Chair Jerome Powel and other policymakers are expected to hike rates by 0.5%. 

    Macklem said on Wednesday that the interest rates rate could rise to 2% to 3% and even go higher up. He said that economy does not work well when the inflation s variable and high. When the market expectations have risen higher, the inflation is coming down to the bank’s target of 2%, adding that he would not like to see them go up further. 

    Bank of Canada is predicting a 3.5% robust growth rate in 2022, and even though the inflation is higher, there is hardly any evidence of risk of recession. Unemployment is the lowest in Canada in the last 45 years, with no signs of stagflation. 

    Central banks predict growth of 4.25% in 2022 and 3.25% in 2023 in Canada. This rate is well above the country’s long-term speed limit, and it is also better than many peer countries, including the U.S., which is growing at 2.8% in 2022.

    Canada outperforming is due to its resource-based economy getting buffered by high commodity prices that have resulted from the Ukraine war. Also, because of strict Covid -19 restrictions, Canada had come out slowing from the pandemic. 

    Macklem remains optimistic that higher rates will slow down demand and inflation without causing significant disruption in the economy. He declined to characterize the current inflation as a crisis. This optimism is based on certain assumptions like increased business investment, improvement in the supply chain, and productivity after Covid restrictions are withdrawn. 

    A 2% inflation target guides the bank of Canada in response to its high inflation in the 1970 era. Macklem said that price stability must be focused upon; otherwise, nothing else will work.



    RELATED ARTICLES

    Tesla’s Cheapest Cybertruck

    Tesla’s Cheapest Cybertruck Will Cost $60,990 in 2025

    Bloomberg News reports that after two years of delay and production glitches, Tesla Inc. has...
    JPMorgan’s S&P 500

    JPMorgan’s S&P 500 2024 Outlook Grimmest on Wall Street

    Bloomberg News reports that as the strategists on Wall Street are calling for an all-time...
    Fed Will Cut Interest Rates

    Fed Will Cut Interest Rates as Soon, Predicts Bill Ackman

    Bloomberg News reports that Bill Ackman, the billionaire investor, bets that the Federal Reserve will...
    AI Startup

    AI Startup of Google Raises $24 Million for Biotech Work

    Bloomberg News reports that the European biotech startup Cradle has raised as much as $24...
    Quantum Computing Lab

    Quantum Computing Lab Shut by Alibaba in Sign of Broader Cutback

    Bloomberg News reports that Alibaba Group Holding Ltd. has shuttered its quantum computing lab for...
    Water Damage Repairs

    Don’t DIY Water Damage Repairs to Your Business

    If your workplace ever suffers from water damage, you might be tempted to start fixing...
    MBA Programme

    Dual Degree MBA Programme: A Unique Educational Opportunity

    In today's world, professional success requires more than traditional management skills. It calls for a...
    women ipl

    Women IPL Sensation Shreyanka Patil: From Fan to Champion

    In a cricketing universe usually ruled by dudes, Shreyanka Patil, the rookie wonder for Royal...
    Monetize Magnet

    Monetize Magnet Review – The Best Crypto and Forex CPA Network

    In today's world, cryptocurrency has reached new heights, expanding continuously and providing online earning opportunities...
    celsius drink

    Celsius Drink – What Is It and How Safe Is It?

    These days, you must come across your social media feeds with an advertisement for a...
    low porosity hair

    Low Porosity Hair Problem? Slay Locks with Moisture Miracle

    Have you ever experienced your hair being stubbornly resistant to moisture? That's low porosity hair...