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MNI INTERVIEW: BOC Has Strong Case to Cut This Year-Ex Adviser

(MNI) OTTAWA
OTTAWA (MNI)

Andrew Spence says policy is already relatively tight as inflation continues to slow.

The Bank of Canada will have a strong case to reverse course and cut interest rates later this year as inflation slows and indebted consumers feel the growing weight of the fastest tightening cycle in decades, former special adviser Andrew Spence told MNI.

While Governor Tiff Macklem signaled a pause after the quarter-point increase on Jan. 25 and said he could hike again if needed, Spence said downside inflation risk is more relevant. Monetary policy looks tight following 425bps of hikes and the Bank's view inflation will slow to 3% this year and 2% in 2024 is more certain with the worst shocks from Covid and the Ukraine war fading, Spence said.

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The Bank of Canada will have a strong case to reverse course and cut interest rates later this year as inflation slows and indebted consumers feel the growing weight of the fastest tightening cycle in decades, former special adviser Andrew Spence told MNI.

While Governor Tiff Macklem signaled a pause after the quarter-point increase on Jan. 25 and said he could hike again if needed, Spence said downside inflation risk is more relevant. Monetary policy looks tight following 425bps of hikes and the Bank's view inflation will slow to 3% this year and 2% in 2024 is more certain with the worst shocks from Covid and the Ukraine war fading, Spence said.

Keep reading...Show less