BoC’s Macklem: Inflation decline expected to be gradual and uneven

BoC Governor Tiff Macklem emphasized the anticipated “gradual and uneven” decline in inflation towards 2% target. Speaking to the House of Commons Finance Committee, he noted that the journey to achieving inflation target “will be slow,” highlighting the persistence of risks along the way.

The central bank’s focus has evolved from assessing the sufficiency of current restrictive monetary policy stance to “how long to maintain the current restrictive stance,” he added.

Macklem also pointed out that while the Bank is keen on starting to reduce interest rates to support economic growth, it remains vigilant. The decision to lower rates will be contingent on a clear trajectory towards the inflation target, ensuring premature policy easing does not derail the progress made.

He stated, “you do want to start lowering interest rates before you’re all the way back, but you don’t want to lower them until you’re convinced…that you’re really on a path to get there.”

Additionally, the Governor reiterated the Bank’s readiness to adjust rates upwards should “new developments” warrant further action to curb inflation.