David Dodge appears on BNN Bloomberg to discuss the need for the Bank of Canada to increase interest rates quickly with inflation running at a three-decade high.
He says, “I think what we have to do is get rates up quickly but not excessively. And I think that the worst thing that could happen is that we delay and delay and delay in getting rates up—and this is true not just of Canada—and then we have to ramp them up very rapidly and very suddenly to very contractionary levels, and then we do risk a problem.”
David said he views the neutral rate—an area where the Bank of Canada’s benchmark level neither stokes inflation nor constrains economic growth—as between two and two-and-a-half per cent.
