Bank of Canada Warns New US Tariffs May Cut Growth Below 1%

Bank of Canada Governor Tiff Macklem warned on Monday that new US tariffs could halve Canada's fourth-quarter growth to below 1%. The central bank faces competing pressures as slower growth may push inflation down, while a Middle East conflict could drive it higher through rising oil prices.

Canada's annual inflation rate stands at 3%, above the bank's 2% target. Macklem said inflation could rise further if oil prices remain near $100 per barrel, which would be a significant increase from current levels.

The Canadian economy grew at an annualized rate of 3.3% in the second quarter as businesses and households adjusted their plans after nearly 18 months of US tariffs. The Bank of Canada had forecast third-quarter growth of 1.5% in July, before the latest tariffs were announced.