Tiff Macklem sees Bank of Canada cutting interest rates in 2024
Bank of Canada governor Tiff Macklem said he expects to start cutting interest rates next year but needs to see several months of sustained downward momentum in core inflation first.
“I think it is sometime in 2024,” Macklem told BNN Bloomberg Television, when asked when he sees the central bank lowering its benchmark overnight rate.
Policymakers need to see “not one or two months” but “a number of months” of deceleration in underlying inflation before considering cutting rates, Macklem said.
It’s the clearest statement the governor has made to date about the potential timeline for the Bank of Canada to start easing monetary policy, and it lines up with how most economists see events unfolding. It also highlights a shift in how officials are thinking — they’ve moved their focus from how high rates must go, to how long they must stay at current levels.
The United States Federal Reserve held borrowing costs steady last week, but forecasts showed broader consensus for rate cuts in 2024. In a news conference, chair Jerome Powell indicated policymakers are also turning their focus to when to cut rates as inflation continues its descent toward their two per cent goal, prompting a rally in bonds and stocks.
For the Bank of Canada, one of its preferred measures of core inflation, a three-month moving average of the so-called trim and median core rates, slowed to an annualized pace of 2.96 per cent in October. That’s within the bank’s inflation control range of one to three per cent for the first time since March 2021.
The trim and median core rates averaged a yearly 3.6 per cent in October but are expected to ease in November inflation data, to be released Tuesday at 8:30 a.m. Ottawa time. The deceleration has raised questions
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