Evidence of meeting #141 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was inflation.
A recording is available from Parliament.
Senior Deputy Governor, Bank of Canada
Again, we are not tax experts. It's not our job to evaluate the effect of tax policies.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you.
Governor, I want to talk about gasoline prices for a moment. They've spiked in recent weeks in most parts of Canada, for several different reasons. Can you estimate the impact of these higher gas prices on year over year CPI inflation for April and May?
Do you think that higher gasoline prices are a reflection of excess demand in Canada's domestic economy? Will interest rates in Canada bring down the price of gasoline?
Governor, Bank of Canada
The short answer to the second part of your question is no, I don't think this reflects excess demand in Canada. I think this largely reflects the global price of oil, particularly given the tensions in the Middle East. This is creating uncertainty in global oil markets. You've seen the global oil prices go up, and that is reflected very quickly in gasoline prices at the pump.
In terms of the contribution that this is likely to make for inflation, the increase in gasoline prices is really why we think headline inflation is going to remain around 3% for the next several months, even as we continue to expect underlying or core inflation that strip out those volatile components to continue to gradually tick down, as we have seen it do in recent months.
Obviously, at the end of the day our target is total CPI inflation. That reflects the cost of living for Canadians and that's what we're committed to getting back to 2%. Global oil prices can be volatile. They go up and down with geopolitical events and other events, so we tend to look through those and focus more on underlying inflation.
In terms of the message to your constituents, we're really focusing on looking for that continued gradual downtick in core inflation.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Davies.
On that, we want to thank Governor Macklem and Senior Deputy Governor Rogers. Thank you for coming before us with your report from the Bank of Canada on monetary policy and answering the many questions from our members.
Members, the governor and his office have sent out an invitation. Can you RSVP back to the governor? That is for us to tour the Bank of Canada in June.
Thank you, Governor. We wish you the best for the rest of your day.
Governor, Bank of Canada
Thank you. Thanks for the opportunity.
We look forward to seeing as many of you as possible at the Bank of Canada.
Liberal
The Chair Liberal Peter Fonseca
Thank you.
Members, we are in a suspended mode right now.
[Proceedings continue in camera]