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supply chain | The severity of the problems surprised the Bank of Canada

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Maria Gill
Maria Gill
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(Toronto) The severity and persistence of supply chain disruptions, which helped fuel the rising cost of living, surprised the Bank of Canada, the deputy central bank governor said Tuesday.

Posted on May 3

In a speech to Women in Capital Markets in Toronto, Carolyn Rogers noted that it has been difficult to get a clear vision of the future over the past two years.

“Problems that started in a few major products, such as microchips, have spread to a wide range of commodities,” El-Sayed Rogers in the prepared text of his speech published in Ottawa.

The invasion of Ukraine intensified supply difficulties and raised commodity prices and inflation around the world. »

Now continue mme Rogers, parts of China are undergoing new lockdowns, which has led to new supply issues, shipping delays and uncertainty.

“These issues we did not anticipate,” she said.

Supply chain turmoil has fueled inflation, which is at its highest level in three decades.

The Bank of Canada raised its main interest rate target by half a percentage point last month, to 1.0%, and warned that more rate hikes would come as it seeks to bring inflation back to its 2.0% target.

Mme Rogers emphasized the independence of the Bank of Canada in its decision-making.

“(The) desire for a public body independent of the banking sector and the political apparatus, whose responsibility is to direct the economy to serve the long-term interests of Canadians, is the basis for the creation of central banks,” he explained.

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Mme Rogers noted that nearly 7% of inflation, which extends to more and more everyday items, has the effect of shrinking household budgets and putting pressure on businesses.

“High inflation in Canada and elsewhere is largely attributable to global pressures, including supply chain disruptions and rising commodity prices. But as the Canadian economy begins to heat up, we cannot allow demand to outpace supply too much or risk fueling further inflation. inflation.”

The Bank of Canada has indicated that it expects inflation to average close to 6% in the first half of the year and remain well above its control range at 1-3% for the rest of the year.

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