Bank of Canada (BoC) Governor Tiff Macklem comments on the policy outlook following the BoC's decision to raise its policy rate by 25 basis points to 5% in July.

Key takeaways

"Further rate decisions will be guided by assessment of incoming data and outlook for inflation."

"Monetary policy is working but underlying inflationary pressures are proving more stubborn."

"Higher interest rates are needed to slow growth of demand in the economy and relieve price pressures."

"Labor market remains tight, even if there are some signs of easing."

"BoC is prepared to raise rates further."

"We are trying to balance the risks of under and over tightening monetary policy."

"If we don't do enough now, we'll likely have to do even more later."

"Governing Council's decision to raise the policy rate reflected persistence in both excess demand and underlying inflationary pressures."

"Consensus in Governing Council was that monetary policy needed to be more restrictive too bring inflation back to 2% target."

"Governing Council did discuss possibility of keeping rates unchanged, but cost of delaying action was larger than the benefit of waiting."

"With increases in policy rate in June and July, our outlook has inflation going gradually back to 2% target