With April inflation at 6.8 per cent, as expected the Bank of Canada increased the policy rate by another 50 basis points on June 1. Although concerned about domestic inflation, the Bank recognizes that inflation is mostly a global problem — and not a made-in-Canada problem. And of course, as the bank knows well, imported inflation cannot be affected by increases in domestic interest rates. In my view, even more than trying to restore its credibility by raising the policy rate, the Bank of Canada is attempting to regain our confidence in the bank. The bank certainly knows that its credibility is on the line unless it increases interest rates and reduces inflation as a result.

Source: thestar June 11, 2022 12:01 UTC