The day after the bank raised its trend-setting lending rate to 1.5 per cent, Paul Beaudry said in a speech that the central bank’s leaders think increasing that to between two and three per cent over the next several months will stifle inflation, but if not, they’ll keep going. (The Logic)

Talking point: Beaudry sketched out how the global economy has been through one supply shock after another—pent-up demand after COVID-19 restrictions, production and transport clogs in China and the effects of Russia’s invasion of Ukraine on commodity and raw-material prices. “Normally, inflationary shocks linked to supply disruptions beyond our borders don’t persist for long” and interest-rate hikes don’t really help, he said, so the bank didn’t rush to respond to these. The next interest-rate announcement in July will include a preliminary assessment of why the bank’s inflation forecasts have been way off, he said. In the meantime, the inflation rate is 6.8 per cent and will probably go higher, Beaudry said, well above the bank’s two-per-cent target.