TORONTO (Reuters) – The Bank of Canada on Wednesday reduced its key benchmark rate by 50 basis points to 3.75%, its first bigger-than-usual move in more than four years, and hailed signs the country has returned to an era of low inflation.
Here are some quotes from central bank officials:
BANK OF CANADA GOVERNOR TIFF MACKLEM ON DECLINE IN INFLATION
“Headline inflation has come down significantly. Yes, part of that is global oil prices – we saw a big decline particularly in gasoline prices – and that can be volatile. But if you look beyond that there are some more fundamental factors. Core inflation has continued to gradually ease largely as we expected.”
MACKLEM ON SHELTER PRICE INFLATION
“If you look at shelter price inflation it’s still elevated but it has started to come off and that has increased our confidence that will gradually continue to ease.”
MACKLEM ON INFLATION FORECAST
“Inflation has come down a little faster than we expected, but if you look at our forecasts over the last year, things have evolved broadly in line with what we expected. We are pleased to see that inflation has come back a little quicker. Reflecting that we’ve taken a 50 basis point cut today. That should help … bring demand and supply back into balance in the economy.”
MACKLEM ON RATE-SETTING DELIBERATIONS
“We had a good discussion. We always chew through the alternatives. But what I can tell you is there was a clear consensus that it was appropriate to take a larger step today, cut 50 basis points.”
MACKLEM ON MONETARY POLICY
“If you look over the last year, the main message is: it hasn’t been easy. Higher interest rates have been tough on Canadians, but monetary policy has worked, and it’s worked largely as we’ve expected.”
DEPUTY GOVERNOR CAROLYN ROGERS ON QUANTITATIVE TIGHTENING
“Our position on quantitative tightening (QT) really hasn’t changed. We’ve always said it’ll operate in the background and it’ll support our rate cuts… The way to interpret the decision we made today is about normalization.”
ROGERS ON CHANGES TO QT
“We’ve had the benefit of time and more data and more discussion. And I think the cut that we made today really reflects that increasing confidence that we’re heading in the right direction. So, QT is also heading in the right direction. We don’t plan any immediate changes to it.”
(Reporting by Fergal Smith, Nivedita Balu and Ismail Shakil)