While we have been clear that Canadians should expect a rising path for interest rates, seeing their mortgage payments and other borrowing costs increase can be worrying. We will be assessing the impacts of higher interest rates on the economy carefully. We also discussed where rates might end up—how high will they need to go? I know many Canadians have the same question.
So let me share the Governing Council’s thinking. Canadians should expect interest rates to continue to rise toward more normal settings. By more normal we mean within the range we consider for a neutral rate of interest that neither stimulates nor weighs on the economy. The neutral interest rate isn’t something we can measure directly. We have to estimate it.