US Tariffs Threaten Canadian Growth Amid Rising Oil Prices
Bank of Canada Governor Tiff Macklem warned that new US tariffs could slash fourth quarter growth in Canada to below 1%. This uncertainty threatens investment and hiring, according to Macklem.
The bank's forecast for third quarter growth remains at 1.5%, but economists expect it to be around this range based on recent indicators. However, if the new tariffs remain in place, growth could halve to below 1% in the fourth quarter.
Macklem also expressed concerns about inflation, citing Canada's annual inflation rate of 3% and the potential for oil prices to push it up further if they remain near $100 a barrel. The Middle East conflict has driven up crude oil prices, damaging gasoline and diesel capacity and adding pressure on fuel costs.
The Bank of Canada is weighing its options regarding interest rates, considering both the impact of slower growth on inflation and the risk that inflation becomes more persistent due to higher fuel costs.