This is especially true now, when community banks are supporting the businesses bearing  Federal Reserve, “Small Business Credit Survey,” (2020), https://www.fedsmallbusiness.org/medialibrary/FedSmallBusiness/files/2020/2020-sbcs-employer-firmsreport.pdf. 9  -7the brunt of the economic effects of the pandemic. This situation strongly argues for flexibility in supervision.
But several things need to happen for inflation to continue easing. And we are particularly concerned about two upside risks to the outlook. First, we have been surprised by the persistence of excess demand and underlying inflation in Canada and globally. We know that higher rates are having an impact, but how big their impact will be is uncertain.