Governor Macklem aims to maintain inflation stability at 2%, with more rate cuts likely ahead
Governor Tiff Macklem expressed satisfaction with inflation falling to two percent but emphasized the importance of maintaining price stability around that target.
Speaking at an event hosted by the Institute of International Finance and the Canadian Bankers Association in Toronto, Macklem highlighted the need for the Bank of Canada to “stick the landing” on inflation control, according to BNN Bloomberg.
Macklem stated that the progress on inflation makes it reasonable to anticipate further interest rate cuts. Statistics Canada reported that the annual inflation rate fell to two percent in August, the lowest in over three years.
“It has been a long journey,” Macklem said. “Now we want to keep inflation close to the centre of the 1-per-cent to 3-per-cent inflation-control band. We need to stick the landing.”
Macklem’s top concerns appear to have shifted from a rebound in prices and more toward weak economic growth and a softening labour market, which could cause inflation to undershoot 2 per cent on the way down.
“Some recent indicators suggest growth may not be as strong as we expected. We will be closely watching consumer spending, as well as business hiring and investment,” he said.
He added: “If there’s further adjustment in the labour market, it probably will be more in unemployment. We don’t think we need more slack. We’d like to see hiring pick up.”
The governor noted that while inflation has improved, the central bank aims to see core inflation measures, including shelter price growth, continue to cool.
The Bank of Canada’s next interest rate announcement is set for October 23.
