Following BoC’s decision to keep interest rates unchanged at 4.50%, Governor Tiff Macklem addressed concerns about the country’s economic growth during a press conference. He acknowledged the weak growth projections, stating, “We are seeing inflation come down even as the economy continues to grow. That is encouraging. But yes, we do expect growth to be weak. It’s expected to be weak through the rest of the year, pick up gradually over the course of next year.”
Regarding the potential for negative growth quarters, Macklem clarified that the central bank is forecasting “small positives,” but conceded that “you can’t rule out that there’s going to be a couple quarters of small negatives.” He emphasized that BoC is not forecasting a major contraction or significant increases in unemployment, distancing the current situation from a typical recession.
Addressing market expectations of a rate cut, Macklem said, “based on the information we have today, the implied expectation in the market that we’re going to be cutting our policy rate later in the year, that doesn’t look today like the most likely scenario to us.” This statement suggests that the central bank may not follow the market’s anticipated course of action, given the current data available.
