As this happens, we expect inflation to come down relatively quickly in the second half of 2022 to about 3% by the end of the year. But to get inflation the rest of the way back to its 2% target, we need a significant shift in monetary policy.
That’s why, in January, we removed our exceptional commitment to hold the policy interest rate at its floor of 0.25% and told Canadians they should expect interest rates to increase. The Bank’s Governing Council agreed that the economy will need higher interest rates to moderate growth in spending and bring demand in line with supply.