The central bank is worried that the Canadian economy is running too hot for inflation to return to its 2% target and that if it waits to act, inflation expectations could rise, making matters worse.
The central bank lifted its benchmark rate to a 22-year high of 4.75% this month and is expected to tighten further in July or September.
A hard landing for the economy, or a recession, could raise unemployment, something the BoC has been hoping to avoid.
"I'm not going to be betting against interest rates and I'm not going to be betting against policy lags."
The data has left analysts pushing back their forecasts of a slowdown to later in 2023 or in 2024 but accompanied by higher than anticipated interest rates.
Persons:
Karl Schamotta, David Rosenberg, I'm, Royce Mendes, Fergal Smith, Steve Scherer, Denny Thomas, Stephen Coates
Organizations:
TORONTO, Bank, Bank of Canada's, BoC, Bank of Canada, Rosenberg Research, Desjardins, Thomson
Locations:
United States, Data, Toronto, Ottawa