In order to maintain sound balance sheets, banks need to manage rising credit risks carefully, including through regular provisions. They can thus avoid the inevitable tightening of credit supply conditions associated with the increasing riskiness of borrowers, early signs of which are already visible, turning into a severe credit crunch.
Conclusion Before we do that, let me conclude with the Bank of Canada’s role. We have a responsibility to deliver low, stable and predictable inflation so Canadians can plan and invest with confidence. At close to 5%, the current rate of inflation is too high. This is well above our 2% target. How did this happen?