MNI BRIEF: BOC Sees Milder Reaction To Tariffs Than To Covid
MNI (OTTAWA) - The BOC's response to any trade war will be milder than emergency measures taken during the pandemic because this time weaker growth comes with competing inflation pressure, Governor Tiff Macklem said Friday.
“We’re not thinking of a Covid type response here. It’s a different shock,” he said in response to a question from MNI after a speech. One difference is the economy won't rebound from a trade war the way it did after the pandemic, he said.
“We’re going to have to proceed quite carefully,” he said. "We have to make sure the tariff problem doesn’t become an inflation problem." (See: MNI INTERVIEW: BOC Gradualism May Withstand Tariffs: CD Howe) He declined detailed comment about the market view he will hold rates steady on March 12 after six prior reductions.
Asked if setting aside tariffs, Canada's economy is strong enough to pause, Macklem said: “It becomes difficult to separate what could be from what will be. We’re going to have to deal with the facts on the ground and just the threat of tariffs is already feeding uncertainty… already doing damage.”