MNI BRIEF: BOC Saw Little Need For A 50BPs Rate Cut
MNI (OTTAWA) - Bank of Canada Governor Tiff Macklem said officials saw little need to go beyond the quarter-point interest-rate cut on Wednesday to a half-point move, because domestic data remains solid and the U.S. trade war is a fluid situation.
“We did not want to get ahead of ourselves,” Macklem said in response to a question from MNI after cutting the key rate to 2.75% from 3%. “We will proceed carefully with any further changes.”
“Monetary policy does need to be forward looking, and the hard data so far still looks good,” he said. “When you look at the survey data, it’s pretty clear, consumer confidence, business confidence, has been sharply affected, and we are expecting to see pullback in household spending and business investment.” (See: MNI INTERVIEW: BOC To Drop Rates In Trade War: Homebuilders)
Asked about a potential future rate hike if inflation flares up following tariffs, Macklem said “the reality is there’s a lot of uncertainty, and against the background, we can’t provide forward guidance.” Senior Deputy Governor Carolyn Rogers said when asked about a recession that the Bank has no new forecast today, and that its recent surveys show “the sentiment has turned quite sharply.”