QUEBEC — Bank of Canada governor Tiff Macklem says that although a slowing economy may not seem like a good thing, it is when the economy is overheated.
According to prepared remarks the governor is delivering to members of CFA Quebec in Quebec City today, Macklem says higher interest rates are working to cool the economy.
In addition to slowing the housing market, the governor says elevated borrowing costs are constraining spending on big-ticket items such as cars, furniture and appliances.
The Bank of Canada raised interest rates for an eighth consecutive time in January and signalled it would take a ‘conditional’ pause from raising rates to assess the effects of higher interest rates on the economy.
In his speech today, Macklem says the Bank of Canada will be ready to raise rates further if inflation proves to be more stubborn than expected.
The Bank of Canada forecasts the annual inflation rate will fall to three per cent by mid-year and to two per cent in 2024.
This report by The Canadian Press was first published Feb. 7, 2023.
The Canadian Press
