Quotes: Top Bank of Canada officials speak after rate decision

(Reuters) – Below are some key quotes from a news conference by Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers on Wednesday after the central bank raised key interest rate by 50 basis points to 3.75%.

Macklem on economic outlook

“We’re expecting roughly zero growth for the next several quarters and to be more specific, the last quarter of this year the first half of next year. After that we expect growth will pick up. So with growth close to zero for the next several quarters, it’s just about as likely that we’ll get some small negatives as we get some small positives. So we could see some contraction in GDP, we could see a very modest growth in GDP. What we don’t expect is, we don’t expect a severe contraction.”

Macklem on pace of rate hikes

“This tightening phase will come to a close. We’re getting closer to that point, but we’re not there yet. So we do expect interest rates will need to go up further and we will determine the pace based on developments going forward.”

Macklem on global developments

“Recently, we have seen some reduction in global energy prices, global supply chains have been resolving. But there’s a lot of uncertainty globally. We could certainly see renewed disruptions in the energy market and increases in energy prices. We could see new disruptions of global supply chains. The bottom line is we cannot rely on global developments to bring inflation down in Canada.”

Macklem on significant slowing of the economy

“We have growth stalling for the next several quarters… To be more precise, growth is close to zero in the fourth quarter this year, and the first two quarters, the first half of next year. What that means is that, yes, a couple, two, three quarters of slightly negative growth is just as likely as two or three quarters of slightly positive growth. That’s not a severe contraction, but it is a significant slowing of the economy.”

Macklem on evidence economy slowing

“We are also seeing clear evidence that the economy is slowing.”

Macklem on size of future rate hikes

“At our previous to meetings in July and September, we increased by 100 (bps) and by 75. So coming into this meeting, interest rates were already considerably higher. Combine that with the fact that there are now clear signs that the economy is slowing, we judge that it was appropriate to slow the pace of increase in our policy rates from very big steps to a big step.”

Macklem on slowing pace of rate hikes

“Looking forward, we also indicated that we expect interest rates will need to rise further. So that suggests that while … that could be another larger than normal step, or we may be able to move to more normal, smaller steps. We are getting closer to the end of this tightening phase. But we’re not there yet.”

(Reporting by Fergal Smith, Ismail Shail and Steve Scherer; Compiled by Denny Thomas)