Paul Beaudry: Economic progress report - are we entering a new era of higher interest rates?

Remarks by Mr Paul Beaudry, Deputy Governor of the Bank of Canada, at the Greater Victoria Chamber of Commerce, Victoria, British Columbia, 8 June 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
09 June 2023


Thank you for the kind welcome and thank you to the Greater Victoria Chamber of Commerce for giving me the opportunity to be here today. It is always a real pleasure to visit beautiful Victoria.

I live in Vancouver, but I often make the trip across to Vancouver Island to take advantage of the natural beauty here. I love riding the Galloping Goose trail out to Sooke to visit the potholes or hiking the beaches in Juan de Fuca Park. I could go on all day about the wonders of Victoria and the island, but instead-and I hope you won't be disappointed-I will focus my talk on interest rates.

First, I want to talk about the Bank of Canada's decision yesterday to raise our policy rate to 4¾%. I will elaborate a bit on our discussion and the thinking behind our decision.

Then I will take a step back and look at where interest rates may be going two or three years into the future and beyond. I will consider the question of where interest rates are likely to settle once inflation has normalized, and whether we may be entering a new environment of higher interest rates. To do this, I'll explore some of the factors that influenced interest rates in the decades before the COVID-19 pandemic and then discuss why these forces may now be shifting.