Bank of Canada Council Says Policy Can Curb Energy Price Spillover

The Bank of Canada’s Governing Council said monetary policy can keep elevated energy prices from spreading into broader inflation, setting out how it views the risk ahead of its next rate decision.

The council’s view follows the bank’s recent 25-basis-point increase in its policy rate to 2.5% amid elevated global energy prices. It sees monetary tightening as a way to limit the effect of energy costs beyond that sector.

The bank’s next rate decision is scheduled for Dec. 9. Inflation reports, GDP data and remarks from Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers may provide further indications of the bank’s assessment. The decision is also the next milestone in the bank’s rate outlook.