Bank of Canada Says Economic Slack Not Yet Absorbed But 'Getting Closer'

• The Bank of Canada will not raise its benchmark interest rate until the slack in the country's economy is absorbed, which has not yet happened but is getting closer, Governor Tiff Macklem said in a newspaper opinion piece on Monday. 
• Macklem also noted that while inflation risks have increased, driven by pandemic induced demand shifts, supply disruptions, and higher energy prices, the central bank continues to view the recent dynamics as transitory. 
• "For the policy interest rate, our forward guidance has been clear that we will not raise interest rates until economic slack is absorbed. We are not there yet, but we are getting closer," Macklem wrote in an op-ed for the Financial Times newspaper. 
• He added that the central bank's flexible inflation target, which is focused on the 2% midpoint of a 1-3% control range, means Canadians can be confident that inflation will be kept under control, while supporting a full recovery.

(Source: Reuters)