Tiff Macklem says he’s not backing down on rate hikes, even as recession fears grow

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WASHINGTON — Bank of Canada governor Tiff Macklem emphasized that he has not changed his mind on interest rate hikes, even as expectations grow about a possible recession next year.

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Macklem told reporters that now is not the time to be flexible on interest rates, reiterating the central bank’s current objective of restoring price stability and bringing inflation down to its two per cent target.

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Macklem says the central bank will be closely watching how the U.S. economy evolves after inflation data for September released yesterday showed core consumer price inflation, excluding food and energy, rose to a 40-year high, increasing the odds of more big rate hikes from the hawkish U.S. Federal Reserve.

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He also has the greenback on his radar as the Canadian dollar continues to lag, saying that if the situation persists, the central bank will have “more work to do on interest rates.”

His comments come ahead of the latest reading on Canadian inflation next week.

The annual inflation rate for August was seven per cent, but Canadians were still feeling pain at the grocery store, with food prices increasing 10.8 per cent in August compared to the same time a year ago — the fastest rate since 1981.

The Bank of Canada will release its latest economic forecast along with it next interest rate decision on Oct. 26.