Bank Of Canada Says No New Rate Hikes Needed If Inflation Falls As Expected  

 

• Bank of Canada Governor Tiff Macklem on Tuesday said that no further rate hikes will be needed if, as expected, the economy stalls and inflation comes down.
• The central bank over the last 11 months has lifted rates at a record pace to 4.5% to tame inflation, which was 6.3% in December, still well above the bank's 2% target. Last month, it said it would hold off on further moves to let the effects of past increases sink in.
• "If new data are broadly in line with our forecast and inflation comes down as predicted, then we won't need to raise rates further," Macklem said in a speech to financial analysts in Quebec City. "Inflation is turning the corner. Monetary policy is working," Macklem said, adding that economic growth would be "close to zero" through the third quarter of this year.
• On Monday, a median of market participants surveyed by the central bank forecast that borrowing costs would come down by half a percentage point by the end of this year, and would fall further next year. When asked by reporters about the survey, Macklem reiterated that it was "really far too early to be thinking about cutting rates. ... We are pausing interest rate hikes to assess whether we've raised interest rates enough." "We need to pause rate hikes before we slow the economy and inflation too much," he said in his speech.

(Source: Reuters)