Bank of Canada Open to Rate Cuts Amid Economic Outlook

In a statement released today, Bank of Canada Governor Tiff Macklem indicated that the central bank may further lower interest rates if the Canadian economy progresses as anticipated. The Bank of Canada reduced its key interest rate by 50 basis points last week to 3.75% and is considering additional cuts to support demand and keep inflation at target levels.

Speaking to the House of Commons finance committee, Macklem emphasized that the central bank is prepared to adjust the policy rate downward to support demand and ensure inflation remains on target. This move would continue a series of rate cuts that began in June, during which the key interest rate has been lowered consecutively four times.

The recent rate cut, which was larger than typical adjustments and the first in over four years, was celebrated as a sign of the country's return to a period of low inflation. September's inflation was recorded at 1.6%, below the central bank's 2% target.

Macklem also expressed the central bank's desire to see a strengthening in economic growth. The decision to lower interest rates last week is expected to contribute to increased demand. The Bank of Canada had previously raised rates to their highest level in two decades to combat rising prices but has shifted its approach in response to economic forecasts and recent inflation data.