The Bank of Canada expects inflation to top 8% as soon as next week when June data is released, and to remain in that range for several more months, Governor Tiff Macklem told a business group in a transcript on the Internet. released late Friday. Macklem, who spoke to the Canadian Federation of Independent Business the day after Wednesday’s shock 100 basis point rate hike, also urged small business owners to avoid building the current rate of increase into their contracts. “Inflation is in the high sevens. It’s probably going to be over eight percent. We have the next CPI next week. We know oil prices were very high in June, so I wouldn’t be surprised to see it move up,” Macklem said. he said. Canadian inflation was 7.7 percent in May, the highest since January 1983. Analysts polled by Reuters expected June inflation to reach 8.3 percent, which would be the highest since 1982 . Macklem reiterated that the Bank of Canada now expects inflation to average around 8 per cent for the coming months, then fall to around 3 per cent by the end of 2023 and to its 2 per cent target in 2024. Canada’s Deputy Prime Minister Chrystia Freeland, who also serves as finance minister, said Saturday that the federal government is responding by “not adding fuel to the flames” through its budget and by addressing some of the drivers of inflation as well as labor and employment policies. housing. . “We are confident that the Bank of Canada has the tools and expertise to do this job,” he told reporters in a telephone briefing, noting the bank’s independent role. Macklem also made it clear that the bank is very concerned about a wage-price spiral, where businesses raise wages to keep workers and then pass the higher costs on to households, who then want higher wages to offset inflation . “You can see this creates a self-perpetuating cycle,” he said, adding that the central bank would take the necessary steps to bring inflation back to target. “So as a business, don’t plan on maintaining the current rate of inflation. Don’t build it into long-term contracts. Don’t build it into wage contracts. It will take some time, but you can be confident that inflation will come down.” The CFIB said it could not release the scheduled recording of Thursday’s webcast due to a technical error. The business group released its minutes late Friday.
(Reporting by Julie Gordon in Ottawa; Editing by Nick Macfie and Diane Craft)
