Macklem Warns of Tariffs and Oil Price Risks for Canadian Economy

Bank of Canada Governor Tiff Macklem warned that US tariffs could halve fourth-quarter growth to below 1%, according to recent comments. This would be a significant blow to the Canadian economy, which is already under pressure.

Macklem also noted that if oil prices stay near $100 a barrel, inflation will likely edge up in the coming months. He attributed this to fuel price increases, which have risen more than expected due to damage to global refining capacity. However, he emphasized that there has been no evidence of higher oil prices spreading to other goods and services.

The Bank of Canada is walking a fine line between containing inflationary pressures and avoiding growth-restrictive monetary policy. Macklem stated that they don't want to raise interest rates if inflationary pressures are contained, but will be closely watching for signs of second-round effects on the economy.