Central bank chief says Canadians should not 'overreact' to temporary inflation

·1-min read
FILE PHOTO: Bank of Canada Governor Tiff Macklem arrives for a news conference in Ottawa

OTTAWA (Reuters) -Bank of Canada Governor Tiff Macklem, writing in a column for the Financial Post newspaper on Thursday, said Canadians can be confident that the cost of living will not rise out of control as the economy reopens from the COVID-19 pandemic.

"The Bank of Canada remains firmly committed to keeping inflation low, stable and predictable," Macklem wrote. "You can be confident that we will keep the cost of living under control as the economy reopens."

Canada's inflation rate slowed more than expected in June to 3.1%, down from a decade-high 3.6% in May, data showed on Wednesday, but some analysts said it might be only a brief reprieve.

It was the third consecutive month that inflation remained above 3% - the top of the bank's 1%-3% control range. In the newspaper column, a medium rarely used by the Bank of Canada, Macklem said inflation will be back within the target range by next year.

Macklem reiterated the bank's position that current inflation pressures are due to temporary factors, such as supply constraints and the comparison to last year's low price levels - both caused by the pandemic.

"All these factors have driven prices up, but none of them are likely to last. So, we shouldn't overreact to these temporary price increases," he wrote.

(Reporting by Steve SchererEditing by Kevin Liffey and Frances Kerry)

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