MNI BRIEF: BOC Sees Two-Sided CPI Risk After Tariff Threat

MNI (OTTAWA) - Bank of Canada Deputy Governor Rhys Mendes said Tuesday there are two-sided risks to inflation stemming from geopolitical risks such as U.S. President-elect Donald Trump's threatened 25% tariffs and slack in the domestic economy. 

Economic projections won't incorporate new geopolitical risks until specific policies are enacted, Mendes said in response to audience questions about tariffs after a speech. He also noted the size of bilateral Canada-U.S. trade means both economies would see an impact. 

“At this stage we see the risks as two-sided," he said. "On the upside, there are clearly geopolitical risks globally," Mendes said. On the downside, a slower-than-expected pickup in GDP growth that absorbs economic slack "could lead to an inflation track that’s somewhat lower than what we anticipate," he said. (See: MNI INTERVIEW: Canada To Match Trump Tax Cut-Ex Finance Staffer)