BOCs Macklem: interest rate hikes have begun to work, but will take time to feed through

Bank of Canada's Macklme is on the wire saying:

• interest rate hikes have begun to work, but they will take time to feed through the economy
• if high inflation sticks, much higher interest rates will be needed to restore price stability and economy will have to slow even more sharply
• with inflation running well above target, the risk of people and firms expecting persistently high inflation is greater then risk of driving the economy into an unnecessary painful recession
• increasing rates rapidly to rebalance supply and demand and keep inflation expectations anchored is our best chance of restoring price stability with a severe contraction
• if inflationary forces are stronger than we expect, we'll start to see inflation coming above our forecasts, and will adjust policy-setting to hitthe 2% target
• if deflationary forces return inflation starts to come in below our forecasts again we will adjust to hit the target
• over the long term it seems likely we won't have the same disinflationary forces we've had for the last 30 years
• potential developments such as an aging workforce and less efficient supply chains could make it harder to bring inflation down to 2% and keep it there. How much harder is difficult to say
• even if volatility does not return to the pre-pandemic level, we can expect it will be much lower than it has been the last three years

The USDCAD has moved below its 100 hour MA at 1.36389 (blue line in the chart below). Admittedly, the price has traded above and below that moving average line over the last three trading days (including earlier today). However momentum cannot be sustained in the price will ultimately move back above the level turning sellers and buyers. Stay below the moving average line now would keep the sellers more control. On the downside, the 30.2% retracement of the move up from last week's low comes in at 1.35789. The rising 200 hour moving average comes in at 1.35596.