The Bank of Canada indicated that persistent price pressures are making it more likely policymakers will need to raise borrowing costs to contractionary levels in order to keep inflation expectations anchored. In a speech a day after the central bank raised its benchmark overnight rate by a half percentage point to 1.5%, Deputy Governor Paul Beaudry gave new guidance Thursday on how high borrowing costs could rise. The policy rate may now go to the top, or even above, what the Bank of Canada considers its “neutral range,” estimated at between 2% to 3%. During their policy deliberations this week, Beaudry said ... (full story)