Bank of Canada governor Tiff Macklem said a further flare\u002Dup in the banking crisis could make achieving 2% inflation harder. Find out more.
In a press conference after the speech, Macklem warned the Bank of Canada “would risk overtightening” if a deeper and lengthier spillover from global banking turmoil led to a tougher borrowing environment than was intended by the bank through its restrictive interest-rate setting., which he said will “take time.
“We’ve all been through this rapid tightening cycle. We’re certainly all getting closer to the end,” Macklem told reporters. “We’ve paused — that doesn’t mean we’re necessarily at the end. It means we know there’s lags and we’re using this pause as the opportunity to assess whether we’ve done enough.”Article contentHe warned in his speech that “if we start to see signs that inflation is likely to get stuck materially above our two per cent target, we are prepared to raise rates further.
The central bank has separate tools to deal with price stability and financial stability independently, he said, noting that a “more pervasive” reemergence of financial stress could lead to “more significant” spillover effects into Canada. While the governor said financial stresses can “strike quickly,” he said again that the central bank is ready with a “range of tools” to provide liquidity in the event of a crisis.
The banking stresses have prompted traders in overnight swaps markets to place bets on the Bank of Canada lowering rates by the end of this year, with a full 25-basis point cut priced by December. In recent communications, Macklem has poured cold water on that, saying it’s too early to be discussing any loosening of monetary policy.
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Global bank stress may alter Bank of Canada's rate path, Macklem saysBank of Canada governor Tiff Macklem said a further flare\u002Dup in the banking crisis could make achieving 2% inflation harder. Find out more.
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Global bank stress may alter Bank of Canada's rate path, Macklem saysBank of Canada governor Tiff Macklem said a further flare\u002Dup in the banking crisis could make achieving 2% inflation harder. Find out more.
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