The governor of the Bank of Canada raises the prospect of faster interest rate cuts, informs the FT

(Reuters) – Bank of Canada Governor Tiff Macklem has opened the door to accelerating the pace of interest rate cuts, the Financial Times reported on Sunday.

Macklem told the newspaper in an interview that rate-setters are concerned about Canada’s labor market and the possibility of low oil prices hurting the economy.

“As you get closer to the (inflation) target, your risk management calculus changes,” Macklem told the paper. “You become more concerned about downside risks. And the labor market is pointing to some downside risks.”

The BoC, after holding its key policy rate at 5%, a more than two-decade high, for a year has cut it by a quarter of a point three times in a row since June, lowering it by 75 basis points to 4.25% earlier this month.

Headline inflation in Canada fell in July to a 40-month low of 2.5%.

Macklem said last week that while the bank saw an increase in growth, there were some downside risks to the expected growth.

“Trade disruption could mean larger deviations in inflation from the 2 percent target,” he said in a speech at the Canada-UK Chamber of Commerce in London.

(Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Edmund Klamann and Susan Fenton)