Higher Interest Rates Are Working

In his speech to CFA Québec, Governor Tiff Macklem explains how the Bank of Canada's increases to the policy interest rate aim to cool the economy and bring inflation down. He outlines how monetary policy controls inflation by adjusting borrowing costs, thereby affecting demand for housing and goods. Macklem notes the impact of rate hikes on borrowing rates, spending, job market tightness, and inflation. He emphasizes the importance of assessing economic developments to determine the path forward, with a focus on achieving the 2% inflation target while acknowledging uncertainties and potential risks.