The “demand” playbook suggests policymakers will be able to put a floor under the downturn by cutting interest rates. But if Boivin is right, and supply issues are the main drivers of inflation, lower interest rates would only make the inflation problem worse by encouraging more demand than providers of goods and services can satisfy. “We don’t think there will be aThis advertisement has not loaded yet, but your article continues below.It’s a big idea.
, redefining the “jumbo” moniker that Bay Street and Wall Street had attached to all the outsized rate increases going on around the world as central bankers chased inflation. Indeed, short-term interest rates in the U.S. fell along with Canadian rates, as the Bank of Canada’s conditional hold reinforced views that the Fed is nearing the end of its own campaign against inflation, Karl Schamotta, chief market strategist at Cambridge Mercantile Corp, said in a note to his clients.
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