Keeping inflation low, stable and predictable is the most important contribution that monetary policy can make to Canada's economic performance, Bank of Canada Governor Mark Carney said in a speech Thursday that hinted at interest rates rising sooner rather than later.
According to Statistics Canada, the core inflation rate rose to 2.1 per cent last month, a half per cent more than Carney expected for early 2010. The Bank of Canada Governor predicted core inflation would not hit two per cent until the latter part of the year, which have many economists predicting it will be tough for him to keep overnight rates at 0.25 per cent for much longer.
"The bank has an unwavering commitment to price stability," Carney said in his speech to the Ottawa Economics Association, after acknowledging core inflation was "slightly firmer" than projected. "The single most direct contribution that monetary policy can make to sound economic performance is to provide Canadians with confidence that their money will retain its purchasing power."
The last time the central bank raised the overnight rate was July 2007. Bank of Canada's next scheduled date for announcing the rate is April 20, 2010.
