Bank of Canada says rates may fall before inflation hits 2%
BNN Bloomberg
A top Bank of Canada official said the central bank has the flexibility to lower interest rates before inflation reaches the 2 per cent target.
Senior Deputy Governor Carolyn Rogers told Bloomberg through a spokesperson that Canada’s benchmark overnight rate could decline from its current level before inflation is completely back to target if the outlook suggested that less-restrictive policy would be enough to get inflation to 2 per cent.
Rogers’ comments clarify her remarks to reporters at a news conference Wednesday, where she said policymakers wouldn’t consider lowering borrowing costs until inflation sustainably reached target. In a new monetary policy report earlier in the day, officials said inflation wouldn’t hit 2 per cent until the second half of 2025.
Her new statement confirms officials see leeway to begin cutting rates before price stability is achieved, and reinforces the possibility borrowing costs can move to a less restrictive stance without hindering the central bank’s ability to fulfill its mandate.
