“The invasion of Ukraine intensified supply difficulties and raised commodity prices and inflation around the world.” (Photo: The Canadian Press)
The deputy central bank governor said, on Tuesday, that the severity and persistence of supply chain disruptions, which helped fuel the rising cost of living, surprised the Bank of Canada.
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,” Carolyn Rogers said in the prepared text of her speech released in Ottawa.
“The invasion of Ukraine intensified supply difficulties and raised commodity prices and inflation around the world.”
And now, Carolyn Rogers has continued, parts of China are undergoing new lockdowns, leading to new supply issues, shipping delays and uncertainty.
“These issues, we didn’t anticipate,” she said.
Supply chain turmoil has fueled inflation, which has reached 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.
Caroline 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.
Caroline Rogers noted that nearly 7% of inflation, which is spreading to more and more everyday items, has the effect of straining household budgets and straining 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 inflation dramatically. Larger “.
The Bank of Canada has indicated that it expects inflation to average around 6% in the first half of the year and remain well above its 1-3% range for the rest of the year.
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