Macklem Urges Bank of Canada to Maintain 2% Inflation Target
Bank of Canada governor Tiff Macklem expresses satisfaction that inflation has dropped to two percent, emphasizing the importance of maintaining price growth around the target.
These remarks were shared during an event in Toronto hosted by the Institute of International Finance and the Canadian Bankers Association, according to Macklem’s prepared comments.
“It has been a long journey. Now we want to keep inflation close to the center of the one to three percent inflation-control band,” Macklem stated.
Considering the progress made on inflation, the governor mentioned the possibility of more interest rate cuts. The timing and extent of these cuts will be based on the economic data evaluated by the central bank.
Last week, Statistics Canada reported that the annual inflation rate had reached two percent in August, the lowest level in over three years.
Macklem mentioned that the central bank aims to see further cooling in its core inflation measures as well as shelter price growth.
The Bank of Canada has already reduced its key interest rate three times, bringing it to 4.25 percent.
With inflation back at the two percent target, some economists anticipate larger interest rate cuts.
CIBC predicts that the central bank will decrease its policy rate by an additional two percentage points by the middle of next year, with two half-percentage point cuts factored into their forecast.
The Bank of Canada’s next interest rate announcement is set for Oct. 23.
In his speech, Macklem also mentioned that the Bank of Canada is reducing its efforts on developing a central bank digital currency, as there is currently no significant justification for one in Canada.