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Bank of Canada still concerned about potentially sticky inflation, says economy still too hot

The country's central bank put a pause on rate hikes earlier this month
Bank of Canada governor Tiff Macklem in Vancouver | Chung Chow, BIV

The Bank of Canada says it’s still concerned inflation might be harder to bring down than expected, noting the economy is still in excess demand.

The central bank published a summary Wednesday on the governing council’s deliberations ahead of its decision to hold its key interest rate steady on March 8.

The members of the governing council, which include the governor and his deputies, were encouraged to see the economy and inflation both slowing, supporting their decision to hold the key interest rate.

However, the governing council remained concerned about the risk of inflation getting stuck above two per cent and agreed that supply was still outstripping demand in the economy.

The Bank of Canada also expects growth in early 2023 could be stronger than it had previously forecast.

Ahead of the federal and provincial governments rolling out their budgets, the governing council also discussed the risk of elevated government spending further fueling demand in the economy.

This report by The Canadian Press was first published March 22 2023.

The Canadian Press