RBC’s McKay calls for ‘fast action’ on rates to curb inflation

RBC's McKay calls for 'fast action' on rates to curb inflation

“We’ve never really gone back as a society and reduced wages because inflation was temporary,” McKay, 58, said. “This is permanent, sustained inflation that has to be dealt with through monetary policy, and therefore we need rapid action this spring as a series of rate increases to address it.”

Royal Bank of Canada Chief Executive Officer David McKay said the country’s central bank needs to take “rapid activity” with numerous interest rate increments to bring inflation under control. Talking in a meeting with Bloomberg News on Tuesday, McKay said he doesn’t think the new speed increase of expansion was transitory. He sees a few indications of a wage-price cycle taking root that has effectively pushed up costs for all time.

McKay’s comments illustrate the extent to which inflation — along with labor shortages, rising wages and housing affordability — has become a top area of concern for the nation’s executives. Canada’s inflation rate has been hovering near 5 per cent in recent months, levels not seen since 2003.

Markets are pricing in at least five Bank of Canada rate hikes this year, beginning as early as Jan. 26, when policy makers will unveil their first rate decision of 2022. Central bank officials have indicated they’re poised to begin raising rates early this year to quell the price pressures after keeping the key policy interest rate at a historic low of 0.25 per cent since March 2020.

Commercial banks charge their best customers just over 2 percentage points above that policy rate.

Support for higher rates is all the more significant given the nation’s households are among the most indebted anywhere, and will be squeezed by the rising borrowing costs — a concern that McKay also highlighted during the interview.

But the banker warned against blaming the nation’s soaring housing costs on its high levels of immigration, given the need for new sources of labor.

“We better figure out a way to accommodate” the population growth, said McKay, whose bank is Canada’s largest by market value. “Because if we don’t figure out a way to accommodate it through housing stock, then it could be the opposite: that we don’t attract immigrants because the cost of living and the quality of life isn’t there. That would be the worst outcome at the end of the day, that people chose to go to other markets because of quality of life.”

Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
Bitcoin, Reverse Crypto After Fed Gains
Bitcoin, Reverse Crypto After Fed Gains
“While Powell did indeed sound dovish at the beginning of the press conference, it seems that he failed to offer enough reassurance to really turn the tide of ...
Stealth omicron variant: should you care about BA.2?
Stealth omicron variant: should you care about BA.2?
What’s next: Scientists are keeping an eye on the BA.2 variant. Per CBS News, health officials hope to find out if it evades COVID-19 vaccines more or causes ...
Kyrie Irving skips COVID jab and benches himself - for now
Black-owned company arriving in Colombia sparks discussion on minority disparity
The pandemic has caused entrepreneurial trouble for many, but downtown Columbia has a disparity in women and minority-owned businesses. “I do kids’ parties ...
Fed says bond maturity runoff will be key tool to sink balance sheet
UK to publish detailed billing of live numbers
“Given the level of interest in the cost of living and inflation we are planning to re-start this series,” Hardie said. “Over the longer term, we are ...
Record 14.5 million Americans signed up for health coverage in 2022 under the Affordable Care Act
Record 14.5 million Americans signed up for health coverage in 2022 under the Affordable Care Act
With the end of open enrollment in most states, people still looking for coverage will need a specific reason, such as losing a job or a change in family ...
Economic indicators flash early warning signal for India's recovery
Investors look to reduce portfolio risk as Fed hawkish rules markets
“I continue to believe you have to be really conservative in your portfolio today,” said Rick Rieder, BlackRock’s chief investment officer of global fixed ...
UniCredit authorizes voluntary departures of 1,200 employees with Italian banking unions
UniCredit authorizes voluntary departures of 1,200 employees with Italian banking unions
Unions had said the plan envisaged 950 job cuts in Italy through voluntary and early retirements, plus 475 new hires. Italian bank UniCredit CRDI.MI has ...
The city of Amsterdam has placed a moratorium on the construction of “dark store” distribution centers
The city of Amsterdam has placed a moratorium on the construction of “dark store” distribution centers
However, “with those companies there are also coming a growing number of complaints from the direct neighbourhood.” The spokesperson cited noise and scooter ...
Future Enterprises agrees to sell stake in insurance JV to Generali
Wall Street and Muni issuers are stung by weak market for new business
For municipal issuers, it’s an abrupt shift from the rabid demand seen last year. Large, highly rated borrowers are finding it harder to price debt at ...
Economic indicators flash early warning signal for India's recovery
Economic indicators flash early warning signal for India’s recovery
The reading probably worsened this month as omicron-fueled Covid-19 cases spiked, forcing some Indian states to resort to virus-control measures including ...
Show next
We will be happy to hear your thoughts

Leave a reply

Compsmag - Latest News In Tech and Business
Logo