Chrystia Freeland Says Bank of Canada’s Monetary Policy Still ‘Contractionary’

Canadian Finance Minister Chrystia Freeland recently discussed the country’s economic situation at a policy conference in Montreal. She noted that despite three consecutive interest rate cuts by the Bank of Canada, borrowing costs remain “contractionary” and are impacting economic activity.

The Bank of Canada has reduced interest rates to 4.25% and may continue cutting if inflation keeps decreasing. Some economists predict rates could fall below 3% by mid-2025, coinciding with the next federal election deadline.

Freeland expressed cautious optimism about achieving a ‘soft landing’ for the economy, avoiding recession while managing inflation. She hopes this will improve public perception of the Liberal government’s economic policies. Currently, the Liberals trail the Conservatives in polls, with cost-of-living issues being a major concern for voters.

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Canada’s recent economic stability has been partly attributed to population growth. However, this growth has led to increased pressure on housing, health, and social services. Officials are now considering measures to address these challenges.

Freeland acknowledged the importance of welcoming newcomers to Canada but emphasized the need for adequate infrastructure and capacity to support population growth. She stressed that increasing housing supply is a top priority, outlining plans to construct approximately four million homes by 2031.

Bank of Canada Governor Tiff Macklem is scheduled to speak soon in Toronto, potentially offering more insights into monetary policy.

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