MNI BRIEF: Still Room For BOC Action Even With Weaker CAD
MNI (OTTAWA) - Bank of Canada Governor Tiff Macklem told reporters Wednesday that while recent CAD weakness is becoming more material monetary policy hasn't been constrained by the depreciation so far.
Part of that is because recent weakness has been driven by uncertainty over trade policy on the real side of the economy, Macklem said after cutting his key rate by a quarter point. Macklem also said one of his goals is making sure inflation expectations remain in check if a tariff war breaks out, saying “If we do our job properly then yes, it’s a one-time increase in the price level.”
Asked about the staff scenario of a tariff war slicing 2.5pp off economic growth in the first year, Macklem said that kind of effect would look to some people like a recession. “This would have a severe effect on the Canadian economy,” he said. “We will do everything we can to be the source of stability.” (MNI INTERVIEW: Canada Already Chilled By Trump Tariff Threat)