Bank of Canada Governor Tiff Macklem has warned that Canada’s economic future remains uncertain, acknowledging the possibility of ongoing shocks despite efforts to stabilize inflation. Blacklock's Reporter said speaking to reporters, Macklem stressed that unexpected economic challenges are inevitable: “There will always be new shocks occurring in the economy. There will always be issues.”His comments followed the bank's decision to cut its key interbank loan rate by a quarter point to 4.25%, marking the third rate cut in 90 days. The next rate announcement is scheduled for October 23. Macklem emphasized the need to further reduce inflation, which currently sits at 2.5%, closer to the Bank's target of 2%. "We still need to get inflation down," Macklem said. “The economy, while it has certainly slowed, it hasn’t weakened sharply. But we haven’t landed the economy yet.”Macklem also highlighted the risks of inflation falling too low as the bank approaches its target. “We do have to guard more against the risk that the economy, inflation, gets to be too weak,” he cautioned.This uncertainty comes after several failed forecasts by the bank that downplayed inflation risks. Macklem previously admitted to errors, stating in a 2022 Senate banking committee hearing, “It’s not like we got everything right. Inflation definitely came up faster than we thought.”In 2020, the bank predicted inflation would remain under 2% in 2023 and that interest rates would stay low for an extended period. These predictions were later proven wrong, with inflation hitting 6.7% in 2022, far exceeding expectations.The bank’s forecasting errors have fueled criticism from opposition leaders, including Conservative Leader Pierre Poilievre, who has repeatedly called for Macklem’s resignation. “A sucker punch, that’s what the Trudeau government hit Canadians with by increasing interest rates after Trudeau and his government promised rates would stay low for long,” Poilievre remarked in 2023.Amid these controversies, Senator Diane Bellemare (Que.) introduced Bill S-275 to amend the Bank of Canada Act, seeking to enhance public scrutiny of the bank’s decision-making. The bill would require annual cost-benefit analyses of rate adjustments and propose a new monetary policy committee to monitor economic impacts.
Bank of Canada Governor Tiff Macklem has warned that Canada’s economic future remains uncertain, acknowledging the possibility of ongoing shocks despite efforts to stabilize inflation. Blacklock's Reporter said speaking to reporters, Macklem stressed that unexpected economic challenges are inevitable: “There will always be new shocks occurring in the economy. There will always be issues.”His comments followed the bank's decision to cut its key interbank loan rate by a quarter point to 4.25%, marking the third rate cut in 90 days. The next rate announcement is scheduled for October 23. Macklem emphasized the need to further reduce inflation, which currently sits at 2.5%, closer to the Bank's target of 2%. "We still need to get inflation down," Macklem said. “The economy, while it has certainly slowed, it hasn’t weakened sharply. But we haven’t landed the economy yet.”Macklem also highlighted the risks of inflation falling too low as the bank approaches its target. “We do have to guard more against the risk that the economy, inflation, gets to be too weak,” he cautioned.This uncertainty comes after several failed forecasts by the bank that downplayed inflation risks. Macklem previously admitted to errors, stating in a 2022 Senate banking committee hearing, “It’s not like we got everything right. Inflation definitely came up faster than we thought.”In 2020, the bank predicted inflation would remain under 2% in 2023 and that interest rates would stay low for an extended period. These predictions were later proven wrong, with inflation hitting 6.7% in 2022, far exceeding expectations.The bank’s forecasting errors have fueled criticism from opposition leaders, including Conservative Leader Pierre Poilievre, who has repeatedly called for Macklem’s resignation. “A sucker punch, that’s what the Trudeau government hit Canadians with by increasing interest rates after Trudeau and his government promised rates would stay low for long,” Poilievre remarked in 2023.Amid these controversies, Senator Diane Bellemare (Que.) introduced Bill S-275 to amend the Bank of Canada Act, seeking to enhance public scrutiny of the bank’s decision-making. The bill would require annual cost-benefit analyses of rate adjustments and propose a new monetary policy committee to monitor economic impacts.
