While the Bank of Canada is “encouraged” by the way higher rates are working to slow inflation, Governor Tiff Macklem said it’s possible interest rates aren’t yet high enough.
“Monetary policy is working to bring inflation down—and we are encouraged by the progress we’ve made so far,” he told the Calgary Chamber of Commerce on Thursday, one day after the central bank opted to leave its policy rate on hold.
“But we are not there yet and we are concerned progress has slowed,” he added.
Macklem said that with consumer price index (CPI) inflation now at 3.3% as of July—down from a high of 8.1% in June 2022—the Bank’s 2% target is “now in sight.”
“Just as it took longer to see clearer evidence that higher interest rates were moderating demand in the economy, it may now be taking longer for this to translate into…