Bank of Canada Governor Expects 2024 to Be Year of Transition

Inflation Expected to Return to Target, Interest Rates to Fall

The Bank of Canada is getting closer to being able to start cutting interest rates. Governor Tiff Macklem said in a speech on May 1 that he expects 2024 to be the year when inflation returns to the Bank of Canada target of 2%. This is a significant change from the Bank's previous forecast, which saw inflation remaining above target until 2025. Macklem also said that he expects the Bank to start cutting interest rates in 2024, with the cuts continuing for around two years.

Macklem's forecast is based on the assumption that the global economy will continue to recover from the COVID-19 pandemic and that there will be no major shocks to the Canadian economy. However, he also warned that there are still risks to the economic outlook, including the possibility of a second wave of COVID-19 infections and the ongoing trade dispute between the United States and China.

If Macklem's forecast is correct, it will be good news for Canadian consumers and businesses. Lower interest rates will make it cheaper to borrow money, which will boost economic growth. However, it is important to note that the Bank of Canada is independent from the government and that Macklem's forecast is not a guarantee of future interest rate decisions.