'We are getting closer' to cutting interest rates, Bank of Canada governor tells MPs

Economic , there's an excess supply of goods, wage increases have stabilized and the labour market has cooled "from very overheated levels," which has helped to bring down prices, Macklem said.

Macklem's upbeat tone could be good news for homeowners and would-be buyers who have been forced to buy or refinance a home with interest rates at 20-year highs.

Acknowledging that higher rates have been hard on Canadians and some sectors of the economy, like real estate, the governor said the bank doesn't "want to keep monetary policy this restrictive for longer than we have to."

Macklem has said in the past that big deficit spending is "not helpful" to the Bank's fight against inflation because it pumps more money into the economy and drives demand for products and services.

While he was clearly reluctant to wade into partisan politics, Macklem said Ottawa's multi-billion dollar spending plan "won't be that big" and is not expected to throw off the inflation fight because the budget also includes tax hikes that will take money out of the economy.

Chambers also said the prospect of a capital gains tax hike could prompt a rush of asset sales now, freeing up cash to be spent — a development that could juice demand and in turn boost prices.