Bank of Canada Governor Signals More Rate Hikes May Be Needed Despite Tighter Financial Conditions

Bank of Canada Governor Tiff Macklem said bond yield surges may not preclude further rate hikes, as financial conditions tightening doesn't substitute for getting inflation down.

Macklem said core inflation measures are still too high and lacking downward momentum, concerning the Bank as it debates further rate hikes.

The Bank is monitoring labor costs, inflation expectations, excess demand, and corporate pricing behavior to determine if more action is needed on rates.

Macklem said the Bank's next forecast will likely not show a serious recession, just a period of slower growth for the economy.

Macklem cited persistent U.S. deficits requiring bond sales as a possible factor in the global spike in long-term bond yields.