Bank of Canada Governor Tiff Macklem says evidence points to inflation continuing to decline despite an uptick in consumer prices seen in April.
“Inflation has come down. It is coming down. We expect it will continue to come down,” Macklem said when asked by media about inflation in Canada unexpectedly rising to 4.4% in April from 4.3% in March.
While the central bank governor acknowledged that April’s inflation reading came in “stronger than we expected,” he said that the increase in overall consumer prices was largely due to a rise in gasoline prices and higher interest rates charged on homeowner mortgages.
About a third of mortgages in Canada have reset at higher interest rates since the Bank of Canada began raising borrowing costs in March 2022.
The latest comments by the Bank of Canada governor appeared to ease expectations that the Bank of Canada will raise interest rates again at its next policy meeting in July.
Before Macklem spoke, money markets had priced in an 80% chance for another interest rate hike in July. After his comments, that likelihood declined to 60%.
The Bank of Canada has lifted its trendsetting overnight interest rate a total of 425 basis points to 4.50% since last March but has paused its increases in recent months as it assesses the economy.
