Bank of Canada (BoC) Governor Tiff Macklem noted on Thursday that spillover risk from United States (US) tariff policies remains a key risk to the Canadian central bank's monetary policy outlook. BoC Governor Macklem's statements caution that the BoC will likely be pivoting to a more trade-reactionary stance and minimizing forward guidance statements from one meeting to the next, which is an incredibly convenient policy shift for a central bank that has continued to cut interest rates while heading into an inflation uptick.
BoC Gov Macklem delivered a speech titled "Navigating Tariff Uncertainty" at the Calgary Economic Development initiative in Alberta.
Key highlights
BoC needs to set policy that minimizes the risk of errors; that means being less-forward looking than normal.
That may also mean acting quickly when things crystallize, but we need to be flexible and adaptable.
Given high degree of uncertainty about base case, our focus is less on best monetary policy for a specific economic outlook.
There can be no doubt about the bank's commitment to low inflation.
Monetary policy must prevent initial direct price increases from spreading. We need to make sure a tariff problem doesn't become an inflation problem.
There remain too many unknowns about tariffs to predict what happens next.
The more inflationary the impact of tariffs, the more monetary policy needs to focus on anchoring inflation expectations.
Canadian economy managed a soft landing. Unfortunately, we're not going to stay on the tarmac for long.
US tariffs could put downward pressure on Canadian energy prices and reduce the profitability of producers.
We're not in a situation where there is a single most likely outcome.
We need to think about more than one outcome, and we need to think about a policy that would work for more than one outcome.
At some point, things will get clearer, and we can get back to putting more weight on being more forward-looking.
We're not talking about double-digit inflation and double-digit unemployment.
We're going to proceed carefully to provide support to the economy, but without taking our eye off the ball of managing inflation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Gold falls amid a possible de-escalation of US-China tensions Premium
Gold pulled back from its all-time high of $3,500 per troy ounce reached earlier on Tuesday, as a resurgent US Dollar and signs of easing tensions in the US–China trade dispute appeared to draw sellers back into the market.
EUR/USD tumbles to near 1.1350 on renewed US Dollar demand
The EUR/USD pair attracts some sellers to around 1.1355 during the early Asian session on Wednesday, pressured by the renewed US Dollar demand. The Greenback recovers after US President Donald Trump said he had no intention of firing Federal Reserve Chair Jerome Powell despite his frustration with the central bank not moving more quickly to slash interest rates.
GBP/USD deflates to weekly lows near 1.3350
GBP/USD loses further momentum and recedes to the 1.3350 zone on Tuesday, or two-day troughs, all in response to the frmer tone in the US Dollar and encouraging news from the US-China trade scenario.
Ethereum rallies 10% amid decline in CME short positions
Ethereum saw a 10% gain on Tuesday after the general crypto market rallied alongside Bitcoin. The rally comes after the ETH Chicago Mercantile Exchange basis plunged from 20% in November to about 5% in April.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.