Bank of Canada Governor Tiff Macklem has indicated that the central bank is approaching a point where it might begin to cut interest rates, which are currently at their highest in 23 years. Speaking to the Senate banking committee, Macklem highlighted that inflation is trending downward, stirring public queries about when rate reductions could commence.
“The short answer is we are getting closer,” Macklem stated, responding to questions on the timing of potential rate cuts. As of March, Canada’s annual inflation rate stood at 2.9%, slightly above the previous month but still below the 3% mark that has been maintained since January. This rate aligns closely with the Bank of Canada’s projections for inflation to hover around this level through the first half of 2024.
Macklem emphasized the need for sustained progress in inflation trends to ensure that moves towards cutting rates are done with confidence in maintaining price stability. “We are seeing what we need to see, but we need to see it for longer to be confident that progress toward price stability will be sustained,” he explained.
This development comes as both businesses and consumers look for relief from the high cost of borrowing, which has been impacting spending and investment decisions across the country.