Bank of Canada Governor Stephen Poloz said he expects the inflation rate to be above 2 percent in 2018, but he is comfortable with that as long as the long-term trend is steady, according to media reports published on Sunday.
Poloz made the comments at a Saturday media roundtable in Washington, according to the reports.
Canada’s central bank on Wednesday kept benchmark interest rates steady. It flagged that more rate hikes would be coming but said it did not know when or how aggressive it would need to be to keep inflation in check.
Poloz told reporters on Saturday that inflation will probably be above 2 percent for the whole year.
“That’s actually a positive thing,” the Canadian Press quoted Poloz as saying.
He said the bank is comfortable with fluctuations in inflation.
“Some people think it’s more mechanical, and that’s fair. If inflation is going to be 2.3 or something like that, you should be raising interest rates to make it 2,” Bloomberg News quoted Poloz as saying.
“I want to go out of my way to help them appreciate that’s not the way it works,” Bloomberg quoted him as saying.
The bank on Wednesday trimmed its economic growth forecast for 2018, but raised its 2019 outlook, saying the economy is operating with little slack.