MNI: BOC Says Must 'Stick The Landing' After CPI Back At 2%

MNI: BOC Says Must 'Stick The Landing' After CPI Back At 2%

Bank of Canada Governor Tiff Macklem said Tuesday that while he's happy inflation has returned to target it's been a long journey and "we need to stick the landing" while reiterating that after three quarter-point rate cuts officials are weighing whether they can move faster or slower.

Officials need to make sure to "keep inflation close to the centre of the 1%–3% inflation-control band" Macklem said in the text of opening remarks in Toronto. The Governor reiterated it's "reasonable to expect further cuts" given progress on inflation, and faster growth would help keep inflation close to target amid recent signs of weakness. (See: MNI INTERVIEW: Undershoot Risk Drives BOC Cuts- Ex Adviser)

"Thanks to decisive monetary policy action and the unblocking of supply chains, uncertainty about costs and inflation are much lower today than two years ago, when inflation peaked above 8% in Canada and was even higher in many other countries," Macklem said.

Speaking to the Institute of International Finance and the Canadian Bankers Association, Macklem noted "a notable increase in financial stress among borrowers without a mortgage, mainly renters." There has been a "concerning" shift in this area he said, pointing to a growing share of borrowers without a mortgage who have reached at least 90% of their credit card limit.

Finally, Macklem said the the Bank is "scaling down" work around a digital currency saying "there is not currently a compelling case to move forward with a CBDC in Canada." Such a move would have also required buy-in from the government including legislative changes.