Bank of Canada Governor Macklem appeared in parliament on Thursday, addressing questions from a House of Commons committe
Macklem was blunt with the big spenders (pps. this is not a political criticism, all parliamentarians are the same):
- said government should avoid major spending increases in the next federal budget so they do not hinder the central bank’s efforts to bring down stubborn inflation
(CAD budget is expected in March or April)
- if spending in the federal budget stimulates demand, it would be “particularly problematic”
- said unexpected developments, such as a sudden supply chain blockage, could still force the central bank to raise interest rates again
- BoC is right now focused on when it should start lowering rates, wants to see price pressures easing and clear downward momentum in underlying inflation first
USD/CAD is circa 1.3380 having fallen during the Thursday North American session alongside broader USD weakness.