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In his last speech of 2023, Bank of Canada Governor Tiff Macklem predicted a slow economy next year.

The Canadian Press

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The Governor of the Bank of Canada's Tiff Macklem expects 2024 to be a year of transition as rising interest rates slow the economy, allowing inflation to moderate. /p>

In his final speech of the year, the governor predicted a slow economy next year and outlined the conditions needed for the central bank to start considering a rate cut.

< p class="StyledBodyHtmlParagraph-sc-48221190-4 hnvfyV">The effects of past rate increases will continue to ripple through the economy, slowing spending and limiting growth and employment, Macklem's prepared remarks read. Unfortunately, this is what must be done to properly curb inflation.

This weakness would help bring back inflation. x27;inflation towards target, he adds, which would open the door to discussions on a rate cut.

He warns, however, that there are no guarantees and that obstacles could arise along the way.

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ELSE ON INFO: What has changed at the CISSS de Lanaudière since the death of Joyce Echaquan?< p class="StyledBodyHtmlParagraph-sc-48221190-4 hnvfyV">When the Governing Council is convinced that price stability is being restored, consideration will then be given to lowering the key rate, and when to do so, Mr. Macklem said. I know it's tempting to start discussing these drops, but it's still too early to think about them.

D' here, the governor says the central bank will continue to evaluate whether interest rates are high enough to temper inflation.

He highlights that the global economy is more volatile, requiring greater flexibility from central banks.

The Bank of Canada has chosen to keep its key rate at 5% in its last three decisions. Most economists expect the next change to be a reduction and that it will come next year.

Macklem's speech also addresses lessons the central bank has learned this year, including the importance of communication.

To To this end, the central bank now plans to hold press conferences during each interest rate decision, rather than once a quarter.

We want households, businesses and different population groups to understand what we do and our motivations. This measure is part of my commitment to explain our actions, he said.

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