Bank of Canada Governor made an opening statement before the House of Commons Standing Committee on Finance on May 2, 2024, alongside Senior Deputy Governor Carolyn Rogers. He began by highlighting the recent policy announcement and the Bank of Canada's Monetary Policy Report.
Governor indicated, "Monetary policy is working. Total consumer price index (CPI) and core inflation have eased further in recent months, and we expect inflation to continue to move closer to the 2% target this year." He also mentioned that the economy looks to be picking up, with GDP growth expected to be solid this year and strengthen further in 2025.
The Governor discussed the recent economic data, mentioning the stalling growth in the second half of the previous year and the rise in the unemployment rate to 6.1% in March. However, he expressed optimism about the forecasted strengthening of economic growth in 2024, attributing it to factors like population growth and increased consumer demand.
Regarding inflation, the Governor stated, "Looking ahead, we expect core inflation to continue to ease gradually." While acknowledging risks to the forecast such as global tensions and house price increases, he emphasized the importance of not leaving monetary policy too restrictive for too long.
When addressing the timing of lowering the policy interest rate, the Governor explained, "The short answer is we are getting closer. We are seeing what we need to see. We just need to see it for longer to be confident that progress toward price stability will be sustained."
In conclusion, the Governor expressed confidence in the progress made against inflation and the need to sustain it. He mentioned, "We want to see this progress sustained." The Governor and the Senior Deputy Governor then opened the floor for questions from the committee members.