Macklem defends Bank of Canada rate pause as growth grinds to halt.

This statement likely refers to a speech or statement made by Tiff Macklem, the Governor of the Bank of Canada, in which he defended the Bank’s decision to keep its interest rate unchanged despite the fact that the country’s economic growth has slowed down. The Governor may argue that the Bank’s current monetary policy stance is appropriate given the current economic conditions and outlook

 

 

Governor of the Bank of Canada, Tiff Macklem, spoke at a business luncheon in Quebec City yesterday, where he defended the recent decision to keep interest rates unchanged. Despite the economy grinding to a halt, Macklem emphasized that the central bank is closely monitoring economic developments and will take the necessary actions to support the recovery.

The governor acknowledged that the pandemic has had a significant impact on the Canadian economy, resulting in a sharp contraction in the first half of 2020. However, he noted that the economy has shown signs of resilience and a strong recovery in the third quarter, outpacing expectations, thanks to government and central bank support measures.

 

Macklem stressed that the outlook for the economy remains highly uncertain, given the ongoing spread of COVID-19 and new variants, and emphasized the need for continued support from the government and the central bank. He also noted that the central bank needs to pause rate hikes before slowing the economy and inflation too much, and shouldn’t keep raising rates until inflation is back to 2%.

 

In Tuesday’s speech, Macklem highlighted key metrics that his officials will be watching, including the need for price gains for services to slow, wage growth and inflation expectations to moderate, and businesses to normalize their price-setting behavior. If these conditions don’t happen, additional monetary tightening will be required, he warned.

 

The governor expects growth In output to be close to zero in the first three quarters of this year, which will allow the economy to move from excess demand to modest excess supply and relieve inflationary pressures.

 

The central bank released survey results on Monday, showing that financial market players expect the bank to reduce its overnight lending rate to 4% by the end of the year, from 4.5% currently, the highest it has been in 15 years. However, Macklem reiterated that it’s far too early to be considering rate cuts and that the bank is seeing hopeful signs that underlying price pressures are beginning to abate.

 

In conclusion, Macklem defend the Bank of Canada’s decision to keep interest rates unchanged, stating that it is based on a careful balance of supporting the economic recovery while managing inflationary pressures and financial stability risks. The central bank will continue to closely monitor the economic developments and take appropriate actions as needed.

 

 

Tiff Macklem, the Governor of the Bank of Canada, has defended the recent decision to keep the interest rate unchanged despite the grinding halt in economic growth. He stated that the central bank is closely monitoring the economic developments and will take appropriate actions to support the economic recovery.

 

Macklem acknowledged that the pandemic has had a significant impact on the Canadian economy and has resulted in a sharp contraction in the first half of 2020. However, he emphasized that the economy has shown signs of resilience and a strong recovery in the third quarter, with growth outpacing expectations. He attributed this to the unprecedented support measures provided by the government and the central bank, which have helped households and businesses weather the economic shock.

 

The governor also noted that the outlook for the economy remains highly uncertain, given the ongoing spread of COVID-19 and the emergence of new variants. He emphasized the need for continued support from the government and the central bank to ensure that the economic recovery remains on track and to address the ongoing challenges facing the economy.

 

In conclusion, Macklem defended the Bank of Canada’s decision to keep the interest rate unchanged, stating that it is based on a careful balance of supporting the economic recovery while managing inflationary pressures and financial stability risks. The central bank will continue to closely monitor the economic developments and take appropriate actions to support the economy as needed.