Bank of Canada Governor Tiff Macklem has declared that the fight against inflation is over, signaling optimism for the country's economic future. Blacklock's Reporter says speaking after the central bank lowered interbank loan rates from 4.25% to 3.75%, Macklem said Canadians can now expect better days ahead.“It worked,” Macklem told reporters. “The outlook? We’re coming out the other side, and I think Canadians can breathe a sigh of relief. It’s a good news story.”Macklem acknowledged the challenges Canadians have faced over the past year. “It has been a long road back from the high inflation we experienced coming out of the pandemic, and yes, it’s been tough,” he said.“High inflation, high interest rates have been painful for Canadians. Now we’re back to low inflation. Interest rates are coming down.”Looking ahead, Macklem projected steady growth for the Canadian economy, with the Bank forecasting GDP growth of 2.1% in 2025 and 2.3% in 2026. “With lower inflation, with lower interest rates, the stage is set for growth to pick up,” he said. “It’s a pretty good-looking story: lower inflation, lower interest rates, a pick-up in growth.”However, Macklem also cautioned that there are still risks. “The biggest downside risk we see is it could take longer than we think for lower interest rates to pass through to stronger household spending.”The Bank of Canada’s Monetary Policy Report also acknowledged that economic growth and hiring have slowed in recent months. Growth for the third quarter is expected to hover around 1.5%, and the labour market is softening, with “modest” employment growth.Despite these concerns, Macklem expressed confidence that the economy would avoid a winter recession. He also hinted at more rate cuts, with the next interest rate announcement set for December 11. “We’ve had four cuts, taking the policy rate from 5% to 3.75%. We expect that as things evolve as we are forecasting, there are more cuts to come,” he said.Reflecting on the bank’s recent policy, Macklem added: “It hasn’t been easy. Higher interest rates have been tough on Canadians. But monetary policy has worked, and it has worked largely as we expected.”Macklem’s optimistic tone marked a departure from his September comments when he warned of potential future economic shocks. He also acknowledged past forecasting missteps, including the Bank's incorrect 2020 prediction that inflation would remain below 2% and its 2021 claim that inflation would be "transitory." Inflation ultimately peaked at 6.7% six months later.
Bank of Canada Governor Tiff Macklem has declared that the fight against inflation is over, signaling optimism for the country's economic future. Blacklock's Reporter says speaking after the central bank lowered interbank loan rates from 4.25% to 3.75%, Macklem said Canadians can now expect better days ahead.“It worked,” Macklem told reporters. “The outlook? We’re coming out the other side, and I think Canadians can breathe a sigh of relief. It’s a good news story.”Macklem acknowledged the challenges Canadians have faced over the past year. “It has been a long road back from the high inflation we experienced coming out of the pandemic, and yes, it’s been tough,” he said.“High inflation, high interest rates have been painful for Canadians. Now we’re back to low inflation. Interest rates are coming down.”Looking ahead, Macklem projected steady growth for the Canadian economy, with the Bank forecasting GDP growth of 2.1% in 2025 and 2.3% in 2026. “With lower inflation, with lower interest rates, the stage is set for growth to pick up,” he said. “It’s a pretty good-looking story: lower inflation, lower interest rates, a pick-up in growth.”However, Macklem also cautioned that there are still risks. “The biggest downside risk we see is it could take longer than we think for lower interest rates to pass through to stronger household spending.”The Bank of Canada’s Monetary Policy Report also acknowledged that economic growth and hiring have slowed in recent months. Growth for the third quarter is expected to hover around 1.5%, and the labour market is softening, with “modest” employment growth.Despite these concerns, Macklem expressed confidence that the economy would avoid a winter recession. He also hinted at more rate cuts, with the next interest rate announcement set for December 11. “We’ve had four cuts, taking the policy rate from 5% to 3.75%. We expect that as things evolve as we are forecasting, there are more cuts to come,” he said.Reflecting on the bank’s recent policy, Macklem added: “It hasn’t been easy. Higher interest rates have been tough on Canadians. But monetary policy has worked, and it has worked largely as we expected.”Macklem’s optimistic tone marked a departure from his September comments when he warned of potential future economic shocks. He also acknowledged past forecasting missteps, including the Bank's incorrect 2020 prediction that inflation would remain below 2% and its 2021 claim that inflation would be "transitory." Inflation ultimately peaked at 6.7% six months later.
