Bank of Canada Governor Tiff Macklem on Wednesday said that there is some uncertainty about how quickly inflation will come down, according to Reuters. However, Macklem added that the bank is confident that inflation will eventually come down, and that the latest GDP data reinforced the view that Q4 2021 growth was strong. With labour markets tightening and evidence of capacity pressures increasing, he added, the BoC expects higher interest rates will be needed to bring inflation back to the 2.0% target. Finally, he noted that there is some evidence that Canadians have not been dipping into excess savings as of late. 

Market Reaction

CAD has not seen any notable reaction to the latest remarks from Macklem, which were broadly in line with the tone of last week's meeting.