By Paul Vieira
Bank of Canada Gov. Tiff Macklem said Wednesday officials are confident that inflation will continue to decelerate, and the central bank is "getting closer" to a point where it is able to cut interest rates.
The Bank of Canada sets its rate policy to maintain 2% inflation. The central bank left its benchmark interest rate unchanged at 5% last month, and at that time Macklem said a cut in June was a possibility.
Macklem, in testimony before senators Wednesday, said data since January have increased officials' confidence that inflation will continue to come down gradually, even amid stronger-than-expected growth.
"What do we need to see to be convinced it's time to cut? The short answer is we are getting closer," Macklem said in opening remarks to the Canadian senate's banking committee. "We are seeing what we need to see, but we need to see it for longer to be confident that progress toward price stability will be sustained."
For three straight months, total inflation in Canada has been under 3%, or the upper end of the Bank of Canada's inflation-targeting range, and core prices--excluding volatile items like food and energy--have also eased.
Minutes summarizing the deliberations among Bank of Canada officials ahead of their April 10 decision indicated a division on how soon the central bank could start cutting interest rates. Still, officials agreed that when rate cuts begin, they need to happen gradually given the risk of inflation reaccelerating, the minutes said.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
05-01-24 1652ET
