Bank of Canada Governor Tiff Macklem stated Thursday that consumer and business confidence indicators remain subdued despite recent economic improvements. The central bank chief noted these sentiment measures continue reflecting cautious behavior among households and corporations, potentially restraining growth momentum.
Inflation Outlook
Governor Macklem provided updated inflation observations:
- Core CPI measures currently exceed the 2% target
- Underlying inflation likely sits “just below 3%”
- Progress evident but “the last mile” of disinflation proving challenging
The remarks suggest policymakers see sufficient cooling to maintain current rates, but insufficient evidence to consider easing. Canada’s headline inflation stood at 2.9% year-over-year in March, while the Bank’s preferred core measures averaged 3.1%.
Policy Implications
The commentary reinforces expectations that the Bank will:
- Maintain its 5.0% overnight rate at the June 5 meeting
- Require several more months of data before considering cuts
- Focus on services inflation and wage growth dynamics
Market pricing currently suggests a 65% probability of a July rate cut, with a full 25-basis-point reduction fully priced by September. The Canadian dollar showed limited reaction, trading at 1.3670 against the U.S. dollar following the remarks.
Governor Macklem emphasized the Bank remains particularly focused on inflation expectations and corporate pricing behavior, which could determine how quickly policy might normalize. The next Monetary Policy Report on July 24 will provide updated economic projections.
Related topics：
- Ledong Robot Plans to Make Hong Kong Stock Ipo Focus on the “Eye of Robot” Track
- A Number of Policies to Stabilize Economic Growth Are Expected to Be Introduced in the near Future
- High-Frequency Data “Divergence” Cannot Conceal the Bright Spots of Infrastructure Financial Support to Expand Investment
