Macklem Warns of Inflation Risks Amid Higher Oil Prices

Bank of Canada Governor Tiff Macklem delivered a cautious assessment of the economy on Monday, citing higher energy prices and US tariffs as competing risks for inflation and growth.

Macklem noted that if oil prices stay near $100 a barrel, inflation is expected to edge up in the coming months. He also mentioned that recent gas prices have been more consistent with an oil price almost $40 higher than where it has been.

The Governor emphasized that the Bank of Canada needs to look beyond the initial shock of higher oil prices when making rate decisions and consider whether inflationary pressures are becoming more persistent.

Macklem also warned that if new US tariffs remain in place, Q4 growth could be roughly halved to below 1%. However, he pointed out that many Canadian businesses have started to adapt to US tariffs, which may mitigate the impact.