By Paul Vieira

OTTAWA--Bank of Canada Governor Tiff Macklem said Wednesday officials are determined to get inflation down to the central bank's 2% target, but there's enough cooling in the economy to start bringing rates lower.

"We still need to get inflation down further to our targets," said Macklem, according to prepared remarks he's expected to deliver at a Montreal conference. Still, "with further and more sustained evidence that underlying inflation is easing, monetary policy no longer needs to be as restrictive as it has been."

Last week, the central bank was the first Group of Seven authority to cut interest rates, to 4.75% from 5%, citing increased confidence that inflation was moving close to its 2% target. Macklem said more cuts were possible should inflation continue to show signs of slowing, leading traders and economists to price in another rate cut in July.

Macklem said high rates have cooled the economy, and that underlying, or core, inflation continues to ease gradually.

Canada's rate decision marked a start among G-7 economies to lower borrowing costs, after a rapid-fire set of rate increases to wrestle down historically high inflation. The European Central Bank followed suit a day after the Bank of Canada with a rate cut of its own.

Write to Paul Vieira at

(END) Dow Jones Newswires

06-12-24 1551ET