Macklem Warns of Persistent Fuel Margin Pressure
Bank of Canada Governor Tiff Macklem expressed concern over higher fuel margins that could persist and add to headline inflation. This is a worry because it would prolong elevated prices, which is not what the economy needs right now.
Macklem also cut the fourth-quarter annualized growth forecast from 3.3% to 0.75%, citing weaker economic growth as a potential reduction in inflation pressure. However, he highlighted competing forces that could push inflation higher: the Middle East conflict and oil prices nearing $100 per barrel.
As for monetary policy, Macklem openly questioned whether the current policy rate is appropriate or needs to be raised, leaving the possibility of a rate hike firmly on the table. The key determinant will be the inflation data and whether higher fuel costs spread into broader prices.