These actions will moderate domestic demand so that a buildup in domestic prices doesn’t add to the inflationary pressures in Canada that are coming from global factors. Raising the policy rate will help moderate spending and rein in inflation. It will make borrowing costs more expensive, and we understand this has many Canadians worried.
We will be watching closely to see how the economy responds to higher interest rates. We’re not on autopilot. We will be looking for signs that the economy is returning to balance. Just as Canadians trusted us to respond with strength and conviction when the economy needed support at the onset of the pandemic, they are counting on us now to lower inflation.