Indeed, why should expectations gravitate around the central bank’s target if the central bank itself cannot correct an inflation deviation by steering the level of economic slack to the appropriate level and, thereby, bring inflation back to target?
But we're seeing persistent inflationary pressures in services, driven by robust demand and tight labour markets. The Bank estimates global economic growth will be stronger this year than we expected in January and April. It is a similar story in Canada. Growth has been surprisingly strong, and the economy remains in excess demand. Consumer spending on services remains robust.