Bank of Canada official casts doubt on following the U.S. Fed on rates
Rogers was asked after her speech about the pressure to keep pace with the Fed and acknowledged that what happens in the U.S. economy will inevitably have knock-on effects in Canada that the central bank might have to contend with.
She said that while the Bank of Canada does not target exchange rates for the Canadian dollar with any other currency in its policy decisions, anything that lowers the forecast for the loonie might impact the central bank’s outlook for inflation.“If our dollar depreciates, particularly against the currencies of our key trading partners, that means imports coming into the country are more expensive. That can put upward pressure on inflation,” she said.
Rogers said that despite inflation coming down overall recently, price pressures on services in Canada will need to slow further before inflation returns to the central bank’s target. While she said the Bank of Canada anticipates the tight labour market easing in months to come, she flagged that labour productivity is not trending in the right direction.Story continues below advertisement
“If we continue to see the above-average wage growth that we’ve been seeing in Canada without stronger growth in productivity, it will be difficult to bring inflation all the way down to two per cent.”
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