Bank of Canada needs ‘assurance’ of 2% inflation path before cutting rates

Bank of Canada Governor Tiff Macklem said the Bank will only start entertaining interest rate cuts once it has “assurance” that inflation is trending back towards its 2% target.

And should inflation surprise to the upside, he said the Bank remains prepared to raise interest rates further.

He made the comments while testifying before the House of Commons Standing Committee on Finance today.

“We don’t want to wait until inflation’s all the way back to 2% before we start cutting interest rates,” he told committee members. “Because if we did that, we would overshoot. We’d go below 2% inflation and we’d cool the economy more than we have to.”

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