Exclusive: Tiff Macklem on the Bank of Canada's surprise rate hike, wrestling inflation and its forecast miss

stays too high, the bigger the risk that this high inflation becomes entrenched in people’s expectations.

It takes time for monetary policy to work its way through the economy and bring inflation down. That’s partly why it’s important to get out in front of it. Monetary policy works in the lag. The sooner you get started, the sooner it’s going to work and the sooner that Canadians will see that it’s working and that will validate those expectations.Article content

We have an inflation target. We don’t have an interest-rate target. Getting inflation back to target is paramount. As we move forward, we’re going to take each of those decisions, based on our best judgments at the time, reflecting our assessment of the economy and importantly, our outlook for inflation.

If you look at CPI-common, which is mostly services, it’s gone up from two per cent to almost four per cent. If you look at the CPI in total, almost three quarters, a little over 70 per cent, 72 per cent to be precise, of CPI components are now rising more than three per cent, more than half are rising more than five per cent.

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