In the aftermath of Bank of Canada Governor Tiff Macklem’s latest comments on the state of the economy, a top economist suggests the governor’s confidence signals rate cuts could be on the way.

Macklem told reporters on Wednesday that the federal government’s plan to limit deficits will help the bank rein in inflation, while inflation data from earlier this week shows that interest rates may be high enough to bring inflation down to its target of two per cent.

Jimmy Jean, vice president, chief economist and strategist at Desjardins, told BNN Bloomberg that the governor’s comments show that the bank believes inflation is trending in the right direction.

“I think his tone today signals that he's not overly concerned about the (federal government) spending and it's also important to highlight that a lot of the announcements involve sums of money that will be spent over a fairly lengthy time horizon,” Jean told BNN Bloomberg in a television interview on Wednesday.

“That all speaks to a Bank of Canada that is growing confident that the tightening is working as intended. Growth has flat-lined, the slack is opening, the job market is loosening.”

Jean now predicts interest rates will start to come down slowly in the spring of 2024, particularly if inflation excluding shelter really decreases.

“I think by April, (the Bank of Canada will) have collected a sufficient body of evidence, by then we'll have inflation presumably more around three per cent,” he said.

“If they've seen sufficient, especially compelling evidence on that front, they'll be really ready to start cutting, not very rapidly, but starting to cut progressively to loosen up some of the pressure.”