Economic conditions exist to support a rate cut, says Freeland

“Inflation has fallen to its lowest point in three years,” he said. “That’s real progress”

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Inflation has fallen to the lowest point in three years and the federal government has created the economic conditions that would allow the Bank of Canada to cut interest rates when it meets next week, on June 5, says Deputy Prime Minister Chrystia Freeland.

“We, the government, as part of the Canadian financial system in charge of federal fiscal policy, have been very conscious of acting in such a way that will create conditions that support the decrease in inflation, that support the creation of conditions that make it possible. “It is possible that the Bank (of Canada) will act to lower interest rates,” he said Tuesday while providing an update on the federal government’s economic plan.

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When asked whether declining inflation and other factors support a rate cut, he described the question as one that “hits on the core concern” of many Canadians.

“For four consecutive months we have seen encouraging inflation figures; (y) for four consecutive months, inflation has been within the Bank of Canada’s target range, and the latest inflation figure of 2.7 per cent in April shows that inflation has fallen to its lowest point in three years.” , said. “That’s real progress.”

Freeland added that central bank Governor Tiff Macklem has said the federal fiscal policies contained in the fall economic statement and the latest federal budget were helpful.

“We’ve been aware of our side of things,” he said.

But he stopped short of advising the Bank of Canada to cut rates, noting that Canada has an independent central bank and “that has served us well.”

Much of the press conference, in which the Minister of Industry, François-Philippe Champagne, and Anita Anand, president of the Treasury Board, participated, focused on other issues such as the tax incentives introduced in the budget and foreign investments in Canada in recent years.

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But Freeland also said Joe Biden’s recent announcement to introduce sweeping tariffs against China, including key parts of the electric vehicle supply chain, was the subject of much discussion when she visited Italy last week for a meeting of finance ministers and governors. of G7 central banks.

He said Champagne has been using tools to screen Chinese investments in Canada, referring to the Investment Canada Act that allows for the review of foreign investments that could harm the country’s economy. He added that Canada has “tariffs” in place against China and would monitor The situation must be taken carefully to ensure the country does not become a backdoor for China to ship products to the United States.

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Freeland also had some harsh words for China, saying it has “an intentional, state-led economic policy that is generating overcapacity and oversupply in specific sectors,” specifically citing aluminum, steel, minerals critical and other manufacturing sectors.

“That’s not following the rules,” he said, “and at a time when it is so important for us in Canada to support this industrial transformation, we cannot allow Canadian industry to be wiped out by Chinese oversupply and capacity.”

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