Bank of Canada may need to raise rates again, despite this week's hold: Macklem

That’s according to prepared remarks the governor is delivering before the Calgary Chamber of Commerce on Thursday.

Statistics Canada reported last week the economy shrank in the second quarter, while the unemployment rate has been rising for three consecutive months. “In trying to balance the risks of under- and over-tightening, governing council decided yesterday to keep the policy rate at five per cent, and agreed there may be a need to raise the policy rate further if inflationary pressures persist,” Macklem said.

Macklem spends a considerable amount of time in his speech defending the central bank's two per cent inflation target. Although inflation may seem close to the target, he said, reaching two per cent is crucial to maintaining predictability and stability in the economy.

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