BoC’s Macklem: Interest rates may now be restrictive enough

BoC Governor Tiff Macklem, at an event overnight, acknowledged monetary tightening is “working”. He suggested that the existing level of interest rates might be “restrictive enough” to achieve price stability.

Addressing the economic outlook, Macklem anticipates a period of softness in the near future. He noted, and highlighted the dissipation of excess demand that previously facilitated easier price increases in the economy.

Despite this outlook, Macklem reiterated BoC’s willingness to increase rates again if the situation warrants.

Macklem’s comments also came in the wake of the government’s Fall Economic Statement, which he believes aligns with the central bank’s objectives.

He remarked positively on the statement’s implications that the government is “not adding new or additional inflationary pressures,” Macklem said. Furthermore, he appreciated the introduction of new “fiscal guardrails”, considering them beneficial from a monetary policy perspective.