MNI BRIEF: BOC Will Mull Further Gradual Interest-Rate Cuts
MNI (OTTAWA) - Bank of Canada Governor Tiff Macklem on Wednesday said officials will keep considering further cuts to borrowing costs, restoring some language he's used through parts of his loosening campaign, while underlining his new view that future moves will be more measured.
“We will be considering further reductions but when we look at things now, our thinking is we will take a more gradual approach,” Macklem said at a press conference after cutting rates by 50bps for a second straight meeting. Earlier this year the Bank made three quarter-point cuts. The Governor said officials discussed a 25bp and a 50bp move at this meeting and in reference to future moves he said “More gradual is more gradual.”
On Canada's weaker dollar, he said a floating exchange rate is a regular part of monetary policy and it's been resilient against major currencies other than the U.S. greenback. The Bank will look at the currency's influence on inflation and growth, he said.
New fiscal pledges for tax holidays and cost-of-living relief checks will be brought into the next forecast, and in a bit of an offhand comment Macklem said he's a fan of the government's past fiscal "guardrails." (See: MNI INTERVIEW: BOC Needs Faster Cuts, Labour Congress Says)
Macklem also said in response to a question from MNI that the Bank doesn't see a recession, because rate cuts are boosting consumer spending and will help offset the drag from lower immigration targets next year. Recessions are also usually defined by widespread layoffs and there's little sign of that, he said.