Bank of Canada Governor Tiff Macklem signaled the central bank could accelerate the pace of interest rate cuts, including a possible 50 basis point cut, The Financial Times reported that Sunday.

The country’s economy grew by 2.1% year-on-year in the second quarter quarter, but fears are growing that falling oil prices, rising unemployment and falling immigration could plunge the country into stagnation.

Macklem said during a visit to London last week that policymakers were increasingly concerned about the country’s jobs market and the impact of lower oil prices on the economy, the sources said.

Since June, the Bank of Canada has cut interest rates by 25% three times, from 5% to 4.25%.

As the FT reports, with inflation in Canada running at 2.5% and approaching the central bank’s 2% target, Macklem said there was scope for a faster pace of cuts.

“The closer, the better.” [inflation] “The goal, your risk management calculus is changing,” he was quoted as saying. “You’re becoming more concerned about downside risk. And the labor market is indicating some downside risk.”

Canada’s unemployment rate was 6.6% in August, up from a low of 4.8% in 2022 and a faster pace than in the U.S., where the rate rose to 4.2% from a low of 3.4% during the COVID-19 pandemic era.

The Bank of Canada still projects the country’s economy will grow 2% this year and 2.1% in 2025.

Maklem, however, said that “it would be appropriate to act more quickly” [on] “interest rates” if growth does not meet expectations, adding that “there is enough slack in [Canadian] “the economy to bring inflation down to target levels,” the FT reports.

“We don’t want to see any more easing,” he was quoted as saying.

Canada is a global energy prospector and oil prices have fallen in the past few weeks.

Canadian oil producers are used to price fluctuations, but “[i]“If it’s a really severe cycle, it will have a big impact,” Macklem reportedly said.

He added that the BOC had not yet decided on a faster path to interest rate cuts and that inflation risks such as housing prices still needed to be monitored, the FT reported.

Moreover, productivity growth in Canada has been weak since the pandemic.

“We thought that once these supply chain disruptions were resolved… new employees were trained, we should see some productivity gains,” Macklem was quoted as saying. “That didn’t happen in Canada, and in fact, it didn’t happen in the U.K. It doesn’t happen in Europe…”

He added, sources said: “There is something about the pandemic that has really hurt productivity growth in many of our countries… The United States is the exception.”