Canada Warned of Tariff-Induced Growth Slump and Rising Inflation

Bank of Canada Governor Tiff Macklem warned on Monday that new US tariffs could reduce Canada's fourth quarter growth to below 1%. The central bank faces competing pressures as slower growth may push inflation down, while the 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.

The Canadian economy grew at an annualized rate of 3.3% in the second quarter, but this growth may be halved to below 1% in the fourth quarter due to new tariffs, according to Macklem.