Ed Devlin joined BNN’s Andrew Bell to discuss the Bank of Canada’s policy rate hike. He said that the BoC did a good job of emphasizing the uncertainty surrounding economic forecasts and that they are in a “precarious spot”. He also mentioned that both the employment rate and labour participation rate have made a remarkable recovery. This segment concluded with Ed giving his thoughts that Canada’s neutral interest rate may be lower than the Bank of Canada estimates.
In the second segment, Ed talked about the Q&A session with BoC governor Tiff Macklem. He thought that the hike was not a loss of credibility for the Bank, but a “reflection of reality”. Ed continued by discussing the uncertainty surrounding what a neutral policy rate might look like, and that he hopes the Bank will be prudent with how high they push interest rates. He emphasized that, due to an increase in debt across the entire economy, changes to interest rates are much more impactful now than they have been in the past. Ed went on to discuss the government’s fiscal policy, inflation expectations, and trends in business investment.