BOC Gravelle: Acknowledged a welcome improvement in Oct inflation measures but more to do.

<p>Bank of Canada's Gravelle speaking after the Bank of Canada's rate decision yesterday where the central bank kept rates unchanged at 5.0%. </p><p> Below are the highlights from his speech where he acknowledged a welcome improvement in October inflation measures but emphasized the need for further progress to achieve price stability.: </p><ul><li>Shelter Price Inflation: Gravelle noted that housing imbalances have serious consequences for shelter price inflation, contributing 1.8 percentage points to the total October inflation rate of 3.1%.</li><li>Housing Supply Response: Emphasized the need for Canada to have more homes and a housing supply that is more responsive to increases in demand.</li><li>Demographic Demand and Supply Issues: Pointed out that a jump in demographic demand, coupled with existing structural supply issues, could explain why rent inflation continues to climb.</li><li>Government Collaboration: Stressed the importance of all levels of government working together on housing policies to boost supply.</li><li>Capacity and Flexibility: Urged the reduction of barriers to adding capacity and ensuring market flexibility to meet future changes in housing demand.</li><li>Housing and Inflation: Warned that without more house building, inflationary pressures in the shelter sector could continue to build.</li><li>Rent Inflation: Highlighted that rent inflation reached a 40-year high in October, with housing supply not keeping pace with recent increases in immigration.</li><li>Housing Activity: Reported that housing activity grew 8.3% in Q3 but remains far below the level needed to meet growing housing needs.</li><li>Immigration's Impact: Commented that recent increases in immigration have boosted near-term consumption but haven't significantly affected inflation.</li><li>Economic Balance: Noted that the economy is now roughly in balance, with a focus on monitoring inflation expectations, wage growth, and corporate pricing behavior.</li><li>Inflation Path: Stressed the importance of indicators in assessing whether inflation is on a sustained path to the 2% target.</li></ul>

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