MNI: BOC's Macklem Says Inflation Is Moving In Right Direction

Bank of Canada Governor Tiff Macklem said Friday this week's inflation report is further evidence price pressures are moving in the right direction, without signaling whether that means he could lower borrowing costs at the next decision in June.

“We’re looking to see that this downward momentum is sustained,” he said during a call following IMF meetings in Washington, noting it's the third straight helpful inflation report. Macklem also recapped the tone of IMF discussions, saying there's more confidence growth is improving and inflation is slowing, and the response of different countries may move along different timetables. (See: MNI INTERVIEW: BOC On Track For June Cut- Ex Researcher)

Asked about past comments the Bank doesn't want to overdo tight policy, Macklem said that while risks are more or less balanced, he's monitoring signs of stress in consumer finances. “There is a risk that we’ve underestimated the traction, the impact of monetary policy going forward, and that could slow the economy more than we think,” he said. “That would mean that getting inflation down would be unnecessarily painful” and the Bank could undershoot the 2% target, he said.

Economists are split on whether the Bank will cut rate in June or wait until July or later to move.