Bank of Canada Governor Tiff Macklem has dismissed talk of an interest rate cut this year, telling reporters “that doesn’t look today like the most likely scenario to us.”
Macklem’s comments came immediately after the central bank announced that it is leaving interest rates unchanged at 4.50% as signs point to inflation in Canada cooling.
Economists had widely expected the Bank of Canada to continue its pause on further interest rate hikes.
Macklem said that recent economic data is reinforcing the central bank’s confidence that inflation pressures are easing across Canada.
Speaking to the media in Ottawa after the rate decision, Macklem said Bank of Canada officials had discussed holding interest rates at restrictive levels for a longer period of time in order to bring inflation back down to the central bank’s 2% target.
However, he dismissed trader bets for interest rate cuts at the end of this year. The Bank of Canada reiterated its expectation that inflation will return to its 2% target by the end of 2024.
The Canadian dollar rallied to its highest level since April 5 and bonds slumped, with the yield on the two-year benchmark note rising to 3.82% after the Bank of Canada’s interest rate decision was announced.
