Bank of Canada Governor: Premature to Discuss Interest-Rate Cuts

OTTAWA – Bank of Canada Governor, Tiff Macklem, stated on Friday that it is premature for senior officials to consider interest-rate cuts, emphasizing the lack of clear evidence that inflation is on a sustainable path towards the target of 2%.

Macklem, speaking in Toronto, anticipates a gradual slowdown of inflation from its current level of 3.1%. Furthermore, he expects weak economic output to persist until mid-2024, potentially leading to an increase in the unemployment rate.

While growth and job prospects are projected to improve next year, Macklem indicated that discussions around rate cuts should only take place once there is certainty regarding a sustainable return to price stability.

“I understand the temptation to rush into these discussions. However, it is too early to consider reducing our policy rate,” Macklem cautioned. He believes that in early 2024, senior officials will be debating whether rates are restrictive enough and how long monetary policy needs to remain restrictive in order to restore price stability.

These remarks follow comments made by Federal Reserve Chair Jerome Powell, who suggested that rate cuts are becoming a topic of discussion. The market reacted with stock prices rising and bonds rallying.

By Paul Vieira

Bank of Canada to Hold Press Conferences After All Rate Decisions, Starting in 2024

OTTAWA — Bank of Canada Governor, Tiff Macklem, announced on Friday that he and Senior Deputy Governor, Carolyn Rogers, will hold press conferences after all eight scheduled rate-policy decisions beginning in 2024. The move aims to enhance transparency and improve communications with the public, allowing households and businesses to better understand the central bank’s rationale.

Currently, press conferences are only held four times a year, in conjunction with the release of quarterly economic updates in January, April, July, and October. However, under the new plan, Macklem and Rogers will take questions from reporters at every decision, demonstrating the bank’s commitment to explaining its actions.

The Bank of Canada also stated that there will be a change in the timing of policy decisions. Currently, rate statements are generally released at 10 am ET. However, starting in 2024, the rate-decision statement will be scheduled for release at 9:45 am ET, followed by the press conference 45 minutes later at 10:30 am ET. Governor Macklem’s opening press-conference statement will be released alongside the rate-policy decision.

The revised schedule is intended to enhance market functioning and eliminate any conflicts with the timing of the North American foreign-exchange option expiry.