Bank of Canada Governor Tiff Macklem suggested in a statement today that the central bank could cut interest rates further if Canada’s economy performs as expected. The Bank of Canada already cut its benchmark interest rate by 50 basis points to 3.75% last week and is considering further rate cuts to stimulate demand and keep inflation at target levels.
Speaking before the House Treasury Committee, Macklem emphasized that the central bank is prepared to adjust interest rates downward to support demand and ensure inflation remains on target. The move follows a series of interest rate cuts that began in June, with the benchmark interest rate being cut four times in a row.
The latest rate cut, which was larger than normal adjustments and the first of its kind in more than four years, was hailed as a sign that the country was returning to an era of low inflation. Inflation in September was 1.6%, below the central bank’s target of 2%.
Macklem also expressed the central bank’s intention to strengthen economic growth. Last week’s decision to cut interest rates is expected to help increase demand. The Bank of Canada had previously raised interest rates to 20-year highs to combat rising prices, but has revised its approach in response to economic forecasts and recent inflation data.
Reuters contributed to this article.
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