Bank of Canada Governor Tiff Macklem signalled Tuesday that interest rates will continue to decline if inflation remains under control.

Macklem made the comments at an event in Toronto. The central bank has made three consecutive cuts this summer, dropping the overnight lending rate to 4.25% from 5%.

Previously, the BoC had held fast to its monetary-tightening policy while targeting 2% inflation, which hit that benchmark in August.

“It has been a long journey,” said Macklem. “Now, we want to keep inflation close to the centre of the 1% to 3% inflation-control band.

“We need to stick the landing.”

Macklem said future interest-rate decisions will be made on a case-by-case basis as new economic data is released.

The latest GDP figures are due to arrive Friday.

“Some recent indicators suggest growth may not be as strong as we expected,” said Macklem. “We will be closely watching consumer spending, as well as business hiring and investment.”

Macklem noted that homeowners’ financial stress indicators for remain relatively low. Although mortgage arrears have risen lately, they are not posing major difficulties, he indicated.

But the BoC has growing concern for borrowers who do not have mortgages, particularly renters.

“We’re now seeing a larger share of these borrowers lagging behind on credit card and auto loan payments,” he said. “Over the past year, the share of borrowers without a mortgage who carry a credit card balance of at least 90% of their credit limit has continued to climb. And this share is now above typical historical levels. This is concerning.”

Analysts and economists have cited high mortgage costs as the primary driver of inflation. During the past two years, high interest rates have dampened commercial real estate investment as prospective buyers kept their capital on the sidelines.

Industry leaders are optimistic that further reductions will spur more investment in 2025.

Photo: Bank of Canada Governor Tiff Macklem