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BoC's Macklem says it's far too early to think about interest rate cuts

Published May 19, 2023 05:22PM ET Updated May 19, 2023 07:36PM ET
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© Reuters. FILE PHOTO: Bank of Canada Governor Tiff Macklem takes part in a news conference after announcing an interest rate decision in Ottawa, Ontario, Canada April 12, 2023. REUTERS/Blair Gable

SAO PAULO (Reuters) -Bank of Canada Governor Tiff Macklem reiterated on Friday it is far too early to be thinking about interest rate cuts, adding that he expects the consumer price index to decline to around 3% this summer and back to the bank's 2% inflation target around the end of 2024.

Macklem told a seminar hosted by Brazil's central bank that the Canadian monetary authority has been using a pause in interest rate increases to assess whether policy has been tightened enough to get inflation back to 2%.

Canada last hiked rates in January, holding its benchmark rate at 4.5% since then, despite saying it would be ready to hike again if inflation risks remain significantly above target.

Macklem also said at the event that he does not expect a recession to happen in Canada, forecasting as a base-case scenario a few quarters of slower but positive growth, even though he acknowledged that risks exist.

"So far, Canadians are proving resilient," the central bank governor said, pointing out that delinquencies on mortgages remain low.

BoC's Macklem says it's far too early to think about interest rate cuts
 

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