Governor Tiff Macklem says economic data since January has improved the central bank’s confidence that inflation will continue to slow, even as economic growth picks up.
The governor says while the Bank of Canada is seeing the evidence it needs to begin lowering interest rates, it needs to see price pressures ease for longer to make sure the decline in inflation is sustained. Economists were widely expecting the central bank to hold its policy rate today and deliver the first rate cut in June.
Canada’s inflation rate slowed to 2.8 per cent in February, while measures of underlying price pressures also eased. The Bank of Canada has slightly revised down its forecast for inflation this year and continues to expect it to return to its two per cent target by the end of 2025.