Bank of Canada Governor Tiff Macklem predicts inflation dropping near the 2% target by late 2024. However, don’t hold your breath for an immediate interest rate cut.
After a year of rate hikes, the economy shows signs of cooling down. Inflation, which skyrocketed to 8% last year, now sits at 3.1%, offering hope for price stability.
While acknowledging the progress, Macklem emphasizes that the battle’s not over. He won’t commit to rate cuts until inflation hits the sweet spot of 2%, stressing the need for “evidence” of sustained stability.
Canadians facing the brunt of rising costs, particularly for food and housing, are understandably concerned. Macklem recognizes the difficult phase, calling it the “tough phase of the monetary cycle.”
Although inflation remains the top worry for Canadians (according to a recent Nanos survey), the prospect of reaching the target within two years offers a glimmer of hope. However, the Bank of Canada remains cautious, prioritizing price stability before considering easing up on interest rates.
Inflation is trending down, but the journey back to normalcy isn’t over. Canadians may still feel the squeeze for a while as the central bank prioritizes tackling inflation before offering relief through potential rate cuts.
