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Trudeau hopes Bank of Canada rate cuts will come 'sooner'



Prime Minister Justin Trudeau expressed optimism about the possibility of the Bank of Canada taking steps to ease monetary policy in response to the recent decline in inflation, which now aligns with the central bank's target range. Speaking at a news conference in Vancouver, Trudeau conveyed his hope that the Bank of Canada would initiate interest rate reductions sometime this year, ideally sooner rather than later. However, he emphasized that the decision ultimately rests with the central bank.


Accompanying Trudeau at the press briefing, British Columbia Premier David Eby attributed the rise in inflation to the central bank's impact on housing costs, particularly through increased mortgage interest expenses, which can be transferred to higher rental prices. While Trudeau and Eby refrained from explicitly advocating for rate cuts, their remarks underscore a growing impatience among politicians, who may see political advantages in lower borrowing costs and are urging central bankers to take action.


Premier Eby was part of a group of provincial premiers who, in the previous year, sent letters to Bank of Canada Governor Tiff Macklem, urging him to refrain from tightening monetary policy. This highlights a history of political pressure on the central bank. When Macklem and his team opted to maintain interest rates in September, Finance Minister Chrystia Freeland praised the decision as "welcome relief" for Canadians. However, this stance drew criticism from some economists, who raised concerns about potential perceptions of political interference in monetary policy.


In January, Canada witnessed a decline in the consumer price index and core inflation measures, reigniting expectations that the Bank of Canada might consider rate cuts as early as April. The overall inflation rate for the month was recorded at 2.9 percent, slightly exceeding the central bank's 2 percent target, which falls within a control band of 1 to 3 percent. The upcoming rate decision from the Bank of Canada is scheduled for March 6, with widespread expectations among economists that policymakers will maintain the overnight rate at 5 percent for the fifth consecutive meeting.


As the nation grapples with economic dynamics and the implications of inflation on various sectors, the dialogue between political figures and the central bank continues to evolve. Trudeau's optimism reflects a broader sentiment among policymakers hoping for timely measures to address economic challenges, especially in the wake of changing inflation trends. The upcoming decisions of the Bank of Canada are anticipated to play a crucial role in shaping the economic landscape and responding to the concerns raised by political leaders.


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