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The Bank of Canada is holding firm on its policy interest rate, despite new data showing a national inflation decrease to 3.1%. Governor Tiff Macklem, speaking at a commerce gathering in Saint John, emphasized the central bank’s commitment to achieving a consistent inflation rate between one and three percent before considering any policy rate changes from its current 5%.
Recent fiscal updates have revealed a $40 billion deficit but forecast no imminent inflationary pressures. This comes after New Brunswick (NYSE:BC) reported a lower inflation rate of 2.8%. Macklem’s comments on Wednesday in Saint John drew from historical instances of stubbornly high inflation, cautioning that if such conditions were to continue, the central bank might need to implement further interest rate hikes. He acknowledged the current economic strains, including the rising costs that businesses face and the consequent increase in workers’ wage demands, while also noting the initial success of the bank’s monetary policy tightening.
The Bank of Canada’s stance reflects a cautious approach to monetary policy, as it navigates the challenges of cooling inflation without stifling economic growth. Macklem’s remarks underscore the delicate balance central banks worldwide are trying to maintain in a volatile economic environment.
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Source: Investing.com