Interest rate cut in June possible as policy rate held at 5%: Bank of Canada

Economic data since January has increased the central bank’s confidence that inflation will continue to slow even as economic growth picks up, governor Tiff Macklem said.

Bank of Canada governor Tiff Macklem has recently said the central bank could begin lowering its key interest rate at its next decision in June after deciding to hold it steady for now.

“Yes, it’s within the realm of possibilities,” Macklem said in response to a question about the possibility of a rate cut in June.

The Bank of Canada kept its key interest rate at five per cent Wednesday and said that it’s begun to see the economic conditions necessary to lower interest rates.

Economic data since January has increased the central bank’s confidence that inflation will continue to slow even as economic growth picks up, governor Tiff Macklem said.

While the Bank of Canada’s conditions to begin lowering interest rates have been met, it needs to see price pressures ease for longer to make sure the decline in inflation is sustained.

“I realize that what most Canadians want to know is when we will lower our policy interest rate. What do we need to see to be convinced it’s time to cut?” Macklem said.

“The short answer is, we are seeing what we need to see but we need to see it for longer to be confident that progress toward price stability will be sustained.”