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MNI INTERVIEW: Undershoot Risk Drives BOC Cuts- Ex Adviser

Steve Ambler discusses timeframe for moving borrowing costs to a more neutral setting.

MNI (OTTAWA) - Canada's central bank will keep cutting borrowing costs into the first half of next year as Governor Tiff Macklem shifts his concern to a potential undershoot of the inflation target, and the speed of reductions toward a more neutral policy will hinge on the extent of further disinflation, former adviser Steve Ambler told MNI.

The Bank of Canada's decision Wednesday to lower interest rates by a quarter point for a third meeting to 4.25% met expectations, but Macklem's comments about undershooting the 2% target "was a fairly significant change in tone," he said.

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MNI (OTTAWA) - Canada's central bank will keep cutting borrowing costs into the first half of next year as Governor Tiff Macklem shifts his concern to a potential undershoot of the inflation target, and the speed of reductions toward a more neutral policy will hinge on the extent of further disinflation, former adviser Steve Ambler told MNI.

The Bank of Canada's decision Wednesday to lower interest rates by a quarter point for a third meeting to 4.25% met expectations, but Macklem's comments about undershooting the 2% target "was a fairly significant change in tone," he said.

Keep reading...Show less