The US Fed has hiked its benchmark rate by 75 basis points three times in a row
The Bank of Canada is not beholden to the United States Federal Reserve’s aggressive rate-hike trajectory, according to Randal Quarles, the Fed’s former vice chair.
“I think, inevitably, given the connections between our economies, there will be a sort of significant tracking (of interest rates),” Quarles said in an interview with BNN Bloomberg.
“But I don’t think that the Fed’s moves should be targeted, and I’m pretty sure that Governor [Tiff] Macklem won’t be targeting them. They’ll be looking at what’s right for Canada.”
In September, the Fed implemented a 75-basis-point hike for a third consecutive meeting, placing the US benchmark rate at 3.25%. Fed chair Jerome Powell has warned that that more similarly sized rakes are on the table.
Read more: More rate hikes needed to stem inflation, says BoC’s Macklem
“We’ve just moved, I think probably, into the very lowest level of what might be restrictive and, certainly in my view and the view of the committee, there’s a ways to go,” Powell said at the time.
Quarles said that not even the threat of a possible economic slowdown would dissuade the Fed from doing “what’s necessary” in continuing its hikes to rein in mounting inflation levels.
“Now, expectations of a recession might result in an abating of inflationary pressures and that could allow the Fed to moderate its course,” Quarles said. “But if it believes inflationary pressures are still existent, the near expectation of a recession will not change its course.”
