In a recent speech in Montreal, Tiff Macklem, Governor of the Bank of Canada, discussed the future of interest rates. He highlighted that rates are decreasing globally but warned that they would not revert to the low levels seen during the pandemic. This shift represents a new normal that borrowers must adapt to.

During a recent speech in Montreal, Tiff Macklem, Governor of the Bank of Canada, shared insights into the evolving landscape of global interest rates. Macklem emphasized that although rates are starting to decrease around the world, they are not expected to return to the historically low levels experienced during the pandemic. This shift demands a significant adjustment from borrowers as they navigate this 'new normal'.

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Macklem also reflected on the Bank of Canada's pandemic-era policies, acknowledging some missteps in handling inflation during that period. He noted that while their aggressive monetary policies effectively controlled inflation at a lower economic cost compared to the 1970s, these actions did impact public trust and the credibility of the central bank.

To regain and maintain public trust, Macklem stressed the importance of the Bank of Canada continuing to deliver effective outcomes for citizens and improving transparency and communication.

The Bottom Line

As global interest rates stabilize at higher levels than those seen during the pandemic, borrowers must adjust their expectations and financial strategies. This 'new normal' not only affects personal and business finances but also shapes central banking policies and public trust in monetary institutions.