Bank of Canada's Macklem: Monetary policy sees more time to ease remaining price pressures

<p>Bank of Canada Governor Tiff Macklem in his prepared text for a speech says monetary policy needs more time to ease remaining price pressures. He adds:</p><ul><li>Monetary policy is working; it has slowed demand, rebalanced the economy, and brought down inflation</li><li>Shelter price inflation is now the biggest contributor to above-target inflation</li><li>Years of supply shortages and the recent increase in newcomers have meant house prices have declined only modestly with higher rates</li><li>Housing affordability is a significant problem in Canada — but not one that can be fixed by raising or lowering interest rates</li><li>Canada's structural shortage of housing is not something monetary policy can fix</li><li>More time is needed to bring down inflation</li><li>Volatility in global oil and transportation costs related to wars in Europe and the Middle East could add volatility to Canadian inflation</li><li>The path back to 2% inflation is likely to be slow and risks remain</li><li>Policy interest rate at 5% is the level we think is needed to take the remaining steam out of inflation</li><li>Discussion about future policy is shifting from whether monetary policy is restrictive enough to how long to maintain the current stance</li><li>We want to see inflationary pressures continue to ease and clear downward momentum in underlying inflation</li></ul><p>Comments are consistent with previous views and is the blue print for a lot of central bankers. "We need more time…."</p>

This article was written by Greg Michalowski at www.forexlive.com.