Bank of Canada Gov. Macklem: Economy Enters Weaker Phase

By Paul Vieira

OTTAWA–Bank of Canada Gov. Tiff Macklem told Canadian lawmakers Monday that economic growth has shifted into a weaker phase, as higher interest rates crimp consumption and bring demand and supply closer to equilibrium.

“With the economy expected to move into excess supply this year and with growth anticipated to be weak for the next few quarters, we think there’s more inflation relief in the pipeline,” Macklem said in his opening remarks to legislators on a parliamentary finance committee.

The Bank of Canada’s mandate is to set interest rates at a level that attains and maintains 2% inflation. He said he expects inflation to average about 3.5% until mid-2024, and then inflation to ease further and reach 2% by the end of 2025.

His testimony–the first of two appearances this week before lawmakers–came days after the Bank of Canada kept its benchmark rate unchanged at 5%. As he did last week, Macklem said he was leaving the door open to further rate increases, if required, should underlying inflation fail to decelerate as expected.

Write to Paul Vieira at paul.vieira@wsj.com