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Macklem: Need Evidence That Inflation Not Coming Down To Hike, But Too Soon For Cuts


Paraphrasing Q&A:

Q: What would you need to see to hike rates again?

A: The pause provides time to assess whether we’ve hiked enough. If economic developments and in particular inflation comes down in line with our forecast, it will confirm that we’ve likely done enough. If on the other hand we start to see an accumulation of evidence that inflation isn’t coming down in line with the forecast then we’re prepared to hike further. This isn’t off one release, we’re looking for an accumulation of evidence. Watching feedthrough from tightening to service prices, whether inflation expectations come down and importantly that inflation is indeed coming down.

Q: Once get to 3% inflation would you start to consider cutting?

A: Keep in mind that inflation still over 6%. Yes, we are certainly seeing clear evidence that has reinforced our confidence that inflation coming down. We have to be humble, there are a number of risks out there which we’ve outlined in the MPR. It’s really far too early to be talking about cuts.

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