CA BOC Gov Macklem Speaks

post: BoC's Gov. Macklem: Tariff shock wouldn't prompt COVID-like response. post: BoC's Gov. Macklem: We're watching core inflation closely.

Good afternoon. It’s a pleasure to be here. I want to thank the Mississauga Board of Trade and the Oakville Chamber of Commerce for inviting me. When I accepted this invitation, months ago, I intended to use this opportunity to launch the renewal process for our monetary policy framework. The framework sets out the goal for monetary policy—to maintain price stability over time. In simple terms, we aim for a 2% inflation target, so inflation remains within a range of 1% to 3% most of the time. We renew the framework, in agreement with the Government of Canada, every five years. This is a strength of our system. It gives us the opportunity to review performance and consider whether the framework remains the best one for the future. That was my speech topic until President Trump announced significant and broad-based tariffs on Canadian exports. While the new tariffs have not taken effect yet, the uncertainty around US trade policy is already affecting our economy. And if the United States starts a protracted trade conflict, the consequences could be severe. I know this is foremost on everyone’s mind. That’s why I’ve adjusted my remarks. President Trump wants to use tariffs as an instrument of US policy. What that means for the global economy and for the Canada-US trade relationship is highly uncertain. We don’t know what tariffs will be imposed, when they’ll start, how long they’ll last—or even really to what end. We also don’t know how Canada and other countries will respond. And even when we know more, it will be hard to predict the economic impacts because we haven’t experienced such broad-based tariffs since the 1930s. What looks inescapable, however, is that a structural change is upon us. Increased trade friction with the United States is a new reality. While there are still more questions than answers, I will use my remarks to speak to some of the key questions: What could this structural change look like? How would a protracted trade conflict affect the Canadian economy in both the short run and the long run? post: BoC's Gov. Macklem: 2026 monetary policy framework renewal should leave the 2% inflation target unchanged. post: BoC's Gov. Macklem: The BoC wants to consider the interaction of monetary policy and housing, does persistently high shelter price inflation distort measures of core inflation? post: BoC's Gov. Macklem: The BoC's focus will be on how we can improve the framework and its implementation to best address structural changes. post: BoC's Gov. Macklem: The updated BoC model shows Canadian output would fall almost 3% over two years if US imposed tariffs, all but wiping out growth forecast for 2025 and 2026.

Good afternoon. It’s a great pleasure to be back in Vancouver for my final speech of 2024. I want to thank the Greater Vancouver Board of Trade for inviting me. I’m particularly looking forward to our discussion after my remarks. Hearing from you is always the best part. As some of you will recall, I was here in Vancouver two years ago in December 2022. Inflation was close to 7%. We’d just raised the policy rate by 50 basis points to 4¼%, our seventh straight rate hike in our fight against inflation, and we signalled we would be considering increasing rates further. Indeed, we ended up raising our policy rate three more times to 5%. Today, inflation is back at our 2% target. Last week we cut our policy rate by 50 basis points to 3¼%, the fifth consecutive decrease since June. We’ve come a long way in the past two years. Monetary policy has worked to restore low inflation. Interest rates have come down substantially, and household spending has begun to pick up. But I am not here to give a victory speech. Price stability is low, stable inflation. Inflation is low once again; now we need to stabilize it around the 2% target. That’s price stability. That’s giving Canadians the confidence that their cost of living will not change materially year to year. Today I want to talk about delivering price stability for Canadians. I’ll start with the present—where the economy is today—and what we are focused on to keep inflation close to the 2% target. Then I will look back to learn from the past. We need to use the pandemic experience to prepare for future crises. post: BOC'S GOV. MACKLEM: THERE ARE RISKS AROUND OUR INFLATION OUTLOOK; WE ARE EQUALLY CONCERNED WITH INFLATION COMING IN HIGHER OR LOWER THAN EXPECTED.

Good afternoon. I’m pleased to be here with Senior Deputy Governor Carolyn Rogers to discuss our recent policy announcement and the Bank of Canada’s Monetary Policy Report. Last week, we lowered the policy interest rate by 50 basis points. It was our fourth consecutive decrease since June and brings our policy rate to 3.75%. We took a bigger step because inflation is now back to the 2% target, and we want to keep it close to the target. In the past few months, inflation has come down significantly. Headline inflation was 1.6% in September, and both our measures of core inflation were under 2½%. Price pressures are no longer broad-based. Our surveys also find that business and consumer expectations of inflation have shifted down and are nearing normal. All this suggests we are back to low inflation. This is good news for Canadians. Now our focus is to maintain low, stable inflation. We need to stick the landing. That means the upward and downward forces on inflation need to balance out. Economic activity picked up this year, but it is still soft. This softness has helped take the remaining steam out of inflation. With inflation now back at 2%, we want to see growth strengthen. Last week’s interest rate decision should contribute to a pickup in demand. Looking ahead, we expect the economy to gradually strengthen in 2025 and 2026, supported by lower interest rates. Population growth will be slower, but we anticipate consumer spending per capita will be picking up. We also expect growth in residential investment to rise as strong demand for housing lifts sales and spending on renovations. We expect business investment to strengthen as demand picks up, and exports should remain strong, supported by robust demand from the United States. Our forecast has inflation staying around the target over the projection horizon. The upward pressure from shelter and o post: Bank of Canada Governor Macklem statement to Senate committee same as one to Commons https://t.co/UjkmhRsQ2K

Good afternoon. I’m pleased to be here with Senior Deputy Governor Carolyn Rogers to discuss our recent policy announcement and the Bank of Canada’s Monetary Policy Report. Last week, we lowered the policy interest rate by 50 basis points. It was our fourth consecutive decrease since June and brings our policy rate to 3.75%. We took a bigger step because inflation is now back to the 2% target, and we want to keep it close to the target. In the past few months, inflation has come down significantly. Headline inflation was 1.6% in September, and both our measures of core inflation were under 2½%. Price pressures are no longer broad-based. Our surveys also find that business and consumer expectations of inflation have shifted down and are nearing normal. All this suggests we are back to low inflation. This is good news for Canadians. Now our focus is to maintain low, stable inflation. We need to stick the landing. That means the upward and downward forces on inflation need to balance out. Economic activity picked up this year, but it is still soft. This softness has helped take the remaining steam out of inflation. With inflation now back at 2%, we want to see growth strengthen. Last week’s interest rate decision should contribute to a pickup in demand. Looking ahead, we expect the economy to gradually strengthen in 2025 and 2026, supported by lower interest rates. Population growth will be slower, but we anticipate consumer spending per capita will be picking up. We also expect growth in residential investment to rise as strong demand for housing lifts sales and spending on renovations. We expect business investment to strengthen as demand picks up, and exports should remain strong, supported by robust demand from the United States. Our forecast has inflation staying around the target over the projection horizon. The upward pressure from shelter and other services is expected to gradually diminish. With stronger demand, the downward pressure on inflation should also dissipate, keeping the upward and downward forces roughly balanced. There are risks around our inflation outlook. The biggest downside risk to inflation post: BANK OF CANADA GOVERNOR TIFF MACKLEM SAYS IF ECONOMY EVOLVES BROADLY IN LINE WITH OUR FORECAST, WE ANTICIPATE CUTTING OUR POLICY RATE FURTHER TO SUPPORT DEMAND AND KEEP INFLATION ON TARGET

post: BOC'S GOV. MACKLEM: WE WILL HAVE TO DISCOVER THE NEUTRAL RATE OVER TIME.

post: BoC’s Macklem: Would Like To See Economic Growth Pick Up Above 2% post: BOC'S MACKLEM: IF THERE'S FURTHER ADJUSTMENT IN THE LABOR MARKET, IT PROBABLY WILL BE MORE UNEMPLOYMENT