If we hadn't raised interest rates, inflation and everything else would be higher, and overall inflation would be higher. We are well aware that when we raise interest rates, this increases the cost of borrowing. That is impacting Canadians. In fact, that's how monetary policy works. It restrains spending to get inflation and everything else down.
The CPI includes mortgage interest costs. That is a major cost for households, so it should be in there. We're well aware that's the part of the CPI that we have the most direct effect on. When we raise rates, mortgage costs go up. Everything else being equal, that pushes inflation higher. In the conduct of monetary policy, we also know that when we reduce our policy interest rate, inflation will come down. That is something we can look through as we conduct monetary policy.
You'll notice we've talked a lot about how we're very focused on core inflation. One of the reasons for that is CPI-trim, which trims out the things that are going up the most and the things that are going down the most. It has systematically been kicking out or removing mortgage interest costs because they are up a lot. By focusing on core, we're effectively looking through the impact of mortgage interest costs on inflation.
The other thing I would say about our measures of core inflation, though, is that our two measures of core—one is 3.1 and one is 2.8—are still well above two. What that's telling you is that yes, if you just pull out the thing that's going up a lot, mortgage interest costs, what's left is going up much more slowly, roughly 2%. If you systematically take out the things that are going up and the things that are going down a lot, you're still well above 2%. That's what we're focused on: getting that down.