On Wednesday, Statistics Canada reported that the country’s annual inflation rate rose to 8.1 per cent in June, from 7.7 per cent in May, the biggest annual change since January 1983. In an exclusive interview with CTV News’ Evan Solomon, Macklem said the inflation rate is “unfortunately … it’s probably going to start at seven for the rest of the year.” “It’s going to be painfully high,” Macklem said Wednesday. The increase in inflation last month was mainly attributed to higher petrol prices. In the interview, Macklem said that gas prices have since declined, so he expects that a month from now, when the Office for National Statistics releases July’s inflation data, the rate will “probably be down a little bit.” But Macklem said demand is outstripping the economy’s ability to produce the goods people want, which will continue to create inflationary pressures. In response to higher-than-expected inflation, the Bank of Canada on July 13 raised the overnight rate by 100 basis points to 2.5%. It was the biggest rate hike by the central bank since August 1998. The next rate decision from the Bank of Canada is set for September 7, following the scheduled August 16 release of StatCan’s July inflation report. In the interview, Macklem said that while getting inflation back to the two percent target is paramount, he expects to raise interest rates again “fairly quickly.” “We are deliberately front-loading our interest rate response. We want to get ahead of that,” he said. In the interview, Macklem also talked about what’s driving the current economic situation and whether he thinks a recession is on the horizon. Tune into CTV National News tonight for more from the exclusive interview.
