(Reuters) – Bank of Canada Governor Tiff Macklem has opened the door to stepping up the pace of interest rate cuts, the Financial Times reported on Sunday.
Macklem told the newspaper in an interview that rate setters are concerned about the Canadian labor market and the possibility that lower oil prices will hit the economy.
“As you get closer to the [inflation] When you are your target, your risk management calculus changes,” Macklem told the paper. “You’re more concerned about the downside risks. And the labor market is pointing to some downside risks.”
After keeping its key policy rate at 5% for a year, the highest level in more than two decades, the BoC has cut rates by a quarter point three times in a row since June, bringing rates down 75 basis points to 4 .25%. earlier this month.
Overall inflation in Canada fell to a 40-month low of 2.5% in July.
Macklem said last week that while the bank saw growth picking up, there were some downside risks to the expected recovery.
“Trade disruptions could mean wider deviations in inflation from the 2% target,” he said in a speech to the Canada-British Chamber of Commerce in London.
(Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Edmund Klamann and Susan Fenton)