BoC’s Macklem: Rate Hikes Will End Soon, But “We Are Not There yet”

Bank of Canada Governor, Tiff Macklem, stated that the bank is getting closer to the end of its rate-hike cycle, but they are not there yet. While the economy is still overheated, the bank's interest rate hikes are starting to have a moderating impact on growth. However, Macklem noted that there is still work left to do to bring inflation back to its target of 2%. The Bank expects a slowdown in economic growth in the coming quarters, with GDP averaging 3.3% for all of 2022, just 0.9% in 2023, and picking up to 2% by 2024. The Bank is walking a fine line trying to balance the risks of both under- and over-tightening. Higher interest rates are necessary in the short term to return to price stability and sustained economic growth.