Freeland says economic conditions justify a rate cut

Inflation in Canada has hit a three-year low, prompting Deputy Prime Minister Chrystia Freeland to suggest that the Bank of Canada could cut interest rates at its upcoming meeting on June 5. Freeland stated that the federal government has been working to create economic conditions that support a decline in inflation, making it possible for the central bank to take action.

“For four months in a row, we’ve seen encouraging inflation numbers; for four months in a row, inflation has been within the Bank of Canada’s target range, and the latest inflation number of 2.7 per cent in April shows inflation has come down to its lowest point in three years,” Freeland said during a press conference.

While Freeland acknowledged the positive impact of federal fiscal policies on inflation, she stopped short of directly advising the Bank of Canada to cut rates, emphasizing the independence of the central bank. The press conference also covered other economic issues, such as tax incentives and foreign investments in Canada.

Freeland also addressed concerns about China’s economic policies, warning against overcapacity and oversupply in sectors like aluminum, steel, and critical minerals. She emphasized the need to protect Canadian industries from being negatively impacted by Chinese practices.

The discussion of potential rate cuts and economic challenges comes amidst global economic uncertainties, including recent tariff announcements by U.S. President Joe Biden targeting China. Freeland highlighted the importance of monitoring foreign investments and trade relationships to safeguard Canada’s economic interests.

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