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Canada has one of the lowest inflation rates in the G7. Does the Bank of Canada really need to push rates higher?

https://www.thestar.com/business/2023/06/30/canada-has-one-of-the-lowest-inflation-rates-in-the-g7-does-the-bank-of-canada-really-need-to-push-rates-higher.html

Some fear Bank of Canada Gov. Tiff Macklem is poised to raise rates again in July in a bid to drive inflation down to its target. ‘It’s two per cent or bust,’ says one economist.

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Prezhotnuts

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What I don't understand is that we are in unprecedented economic times. So maybe the tools that corrected hyper inflation many decades ago isn't the answer here?

I think Singh has a better idea, start taxing excessive profits. Why does say Bell or Loblaws need billions in profits?

Sir_Osis_of_Liver

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Unprecedented times? Hardly.

The annual inflation rate from 1971 to 1991 bounced between roughly 5% and 12%. It was only after BoC adopted the 2% target in the early 1990s that the inflation rate moderated.

My first car loan was through Chrysler, and 'discounted ' to 11% from the 13% bank rate. That was for a Dodge Colt 200E. No AC,, no cruise control, roll your own windows, no radio, no rear wiper, all for roughly $9500, almost $20K in today's money.
Mortgages peaked just over 20% in 1981. My first mortgage was close to 6% in the 1990s.

The "unprecedented" time was that period from roughly 1993 until prior to the pandemic of very low interest and inflation rates.

Kelsenellenelvial

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That’s fair, but it’s not the whole story. Fact is things were more affordable then, particularly for people in entry-level type jobs making near minimum wage. Look at things like median wage vs median cost of housing, and you see a very different storey, even with high interest rates.