Canadian Prime Minister Justin Trudeau anticipates that interest rates will begin to fall by the middle of next year, in line with recent Reuters poll projections, albeit recent economic data has made the central bank more hawkish.
“We’re confident that things will improve. Inflation is decreasing. “We believe interest rates will begin to fall around the middle of next year,” Trudeau told the New York Times in an interview just before returning to Canada from the United Nations General Assembly.
According to polls, Trudeau’s popularity has declined as Canadians grapple with a cost-of-living crisis caused by the central bank’s record pace of interest rate rises to manage inflation.
While inflation has slowed since its peak, the August CPI climbed to 4%, exceeding the central bank’s 2% objective, and Bank of Canada Governor Tiff Macklem stated that rates may be too low.
A majority of economists, 24 out of 34 polled between August 24 and 30, expect the Bank of Canada to retain its policy rate at 5% or higher until at least the end of March 2024. The median forecasts 50 basis point cuts by the end of June next year, in keeping with the Federal Reserve of the United States estimates.
Trudeau has entered a sensitive monetary policy debate, and previous statements on interest rates by his administration and other provincial politicians have prompted concerns about the central bank’s independence.
Earlier this month, Finance Minister Chrystia Freeland defended the Bank of Canada’s independence after her comments that the central bank’s decision to keep interest rates constant “is a welcome relief for Canadians” sparked criticism.
On Saturday, the Prime Minister’s Office declined to comment on Trudeau’s remark.
Pierre Poilievre, the Conservative Party Leader, has blamed the Trudeau government’s enormous spending during the pandemic for the inflation and affordability crisis.
“People are angry at governments because things aren’t going well, and people are concerned.” “So, yeah, it’s a difficult time,” Trudeau told the newspaper.
