Bank of Canada sees monetary policy curbing inflation from energy prices

The Bank of Canada’s Governing Council has stated that monetary policy is capable of preventing higher energy prices from triggering widespread inflation. This assertion comes as the Bank has recently raised its policy rate by 25 basis points to 2.5% in response to elevated global energy prices. The minutes from the Bank’s meeting reflect a belief that monetary tightening can mitigate spillovers from energy prices, aligning with a stance of maintaining a restrictive policy environment. This development appears to influence market sentiment regarding future rate hikes. The Bank of Canada’s next interest rate decision on December 9 will be closely monitored, with market participants looking for any indications that could suggest a shift in policy.

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