The bank released a new forecast last week projecting that inflation would remain around 3.5 per cent for the next year
Governor Tiff Macklem said the central bank could begin cutting interest rates before inflation is all the way back to target, although he said that discussion about loosening monetary policy is still a ways off.
The bank has not ruled out further interest-rate hikes if inflation proves stubborn. However, markets and Bay Street forecasters widely believe the historic monetary policy tightening campaign is at an end. That’s led to speculation about when the bank might begin to cut interest rates, with many analysts betting on rate cuts beginning sometime in the middle of next year.
“We would love to be surprised and find out that we were too pessimistic and we’re able to bring rates down sooner. … We will look forward as much as Canadians to getting interest rates back to a neutral level. But right now our priority is to get inflation down,” she said.
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