Bank of Canada better at handling supply shocks after 'difficult' inflation lesson, says deputy

The Bank of Canada has improved its handling of supply shocks after a difficult lesson from the pandemic. The bank's senior deputy governor, Carolyn Rogers, said the bank was surprised by the persistence of inflation and has since incorporated more real-time data and outreach to businesses. Rogers acknowledged that the bank's forecasting models were built on decades-long experience with low and stable inflation, but the supply constraints proved more persistent than expected. The bank ultimately controlled the situation with interest rate increases and ensured Canadians understood the long-term inflation target. Rogers urged businesses to invest in productivity to reduce affordability concerns, as productivity gains can deliver higher incomes and lower costs. The bank is monitoring the impact of rising oil prices on Canada's economic growth, which could boost income from energy exports but also squeeze consumers and businesses.