Boc: Boc needs to be less prospective than normal – Tiff Macklem

The governor of the Bank of Canada (BOC), TIFF Macklem, said Thursday that the risk of infection of US tariff policies remains a key risk for the monetary policy perspectives of the Canadian Central Bank. The statements of Governor Macklem warn that the BOC will probably be pivoting towards a more reactive position to trade and minimizing future guidance statements from one meeting to another, which represents an incredibly convenient policy change for a central bank that has continued to cut interest rates while heading towards an increase in inflation.

The governor of Bock, Macklem, delivered a speech entitled “Navigating the tariff uncertainty” in the Calgary Economic Development Initiative in Alberta.

Outstanding aspects

Boc needs to establish a policy that minimizes the risk of errors; That means being less predictive than normal.

That can also mean acting quickly when things crystallize, but we need to be flexible and adaptable.

Given the high uncertainty about the base case, our approach is less about the best monetary policy for a specific economic perspective.

There is no doubt about the bank’s commitment to low inflation.

Monetary policy should prevent initial direct price increases spreading. We need to make sure that a tariff problem does not become an inflationary problem.

There are still too many unknowns about tariffs to predict what will happen next.

The more inflationary the impact of tariffs, the more monetary policy does to focus on anchoring inflation expectations.

The Canadian economy achieved a soft landing. Unfortunately, we will not remain on the track for a long time.

The US tariffs could exert down pressure on energy prices in Canada and reduce the profitability of producers.