Bank of Canada's Macklem: Monetary policy sees more time to ease remaining price pressures

Bank of Canada Governor Tiff Macklem in his prepared text for a speech says monetary policy needs more time to ease remaining price pressures. He adds:Monetary policy is working; it has slowed demand, rebalanced the economy, and brought down inflationShelter price inflation is now the biggest contributor to above-target inflationYears of supply shortages and the recent increase in newcomers have meant house prices have declined only modestly with higher ratesHousing affordability is a significant problem in Canada — but not one that can be fixed by raising or lowering interest ratesCanada's structural shortage of housing is not something monetary policy can fixMore time is needed to bring down inflationVolatility in global oil and transportation costs related to wars in Europe and the Middle East could add volatility to Canadian inflationThe path back to 2% inflation is likely to be slow and risks remainPolicy interest rate at 5% is the level we think is needed to take the remaining steam out of inflationDiscussion about future policy is shifting from whether monetary policy is restrictive enough to how long to maintain the current stanceWe want to see inflationary pressures continue to ease and clear downward momentum in underlying inflationComments are consistent with previous views and is the blue print for a lot of central bankers. "We need more time...." This article was written by Greg Michalowski at www.forexlive.com.