Governor Tiff Macklem downplayed fiscal inflation risks, noting that excess supply complicates future rate hikes, a stance that may weigh on the Canadian Dollar as markets reassess the Bank of Canada's tightening trajectory.
Macklem told the House of Commons finance committee on Tuesday that federal spending is not undermining inflation control and said excess supply complicates further hikes, ahead of the November 5 budget. That lowers the odds of near-term BoC tightening and weighs on CAD.
That current fiscal policy is neither unsustainable nor working against the Bank of Canada's objectives.
Because downplaying fiscal inflation risks and citing excess supply may reduce pressure for further rate hikes.
Bank of Canada Governor Tiff Macklem stated that federal spending is not currently undermining inflation control efforts. His remarks to the House of Commons finance committee suggest that excess supply in the economy complicates the case for further interest rate hikes, signaling a more cautious path for monetary policy ahead of the November 5 federal budget.
Governor Tiff Macklem stated that current fiscal policy is neither unsustainable nor working against the central bank's inflation control objectives.
Excess supply complicates the decision to raise rates further, as the central bank balances the need to curb inflation against the risk of over-tightening in a cooling economy.