MNI BRIEF: BOC - Tariffs Will Hurt Exports, Pressure Inflation
MNI (OTTAWA) - Bank of Canada Governor Tiff Macklem on Thursday retained his view a major trade war will do significant damage to exports while a weaker dollar creates some upward inflation pressure, and the risk to growth will increase as the longer trade uncertainty persists.
"Significant, broad-based tariffs will sharply reduce demand for our exports. At the same time, a weaker exchange rate, retaliatory tariffs and supply chain disruptions will raise import prices, putting upward pressure on inflation," Macklem said in the text of remarks for a panel talk at a BIS conference in Mexico.
"Central banks can’t lean against weaker output and higher inflation at the same time. So we will need to carefully assess the downward pressure on inflation from weaker economic activity," Macklem said. Tariffs will curb investment and productivity and "the longer this uncertainty persists, the more it will weigh on economic activity in our countries," he said. (See: MNI INTERVIEW: Trump Canada Threats Amount To A 10% Tariff)