MNI EXCLUSIVE: Bank of Canada's Macklem Interview Excerpts

Following are additional highlights of MNI's interview with BOC Governor Tiff Macklem late Tuesday, with editing for length and clarity.

On the inflation target and the economy's potential:

"One of the essential features of flexible inflation targeting from the beginning has always been that we know that there's a lot of uncertainty about where is economic potential, where is full employment. And there is information in the behavior of inflation itself, or how much space there is for the economy to grow."

In the years before the pandemic, "unemployment was below 6% for that much of that period, close to 40-year lows, we really saw no evidence of inflationary pressures building up. And so what that indicates is that there certainly looks to have been more flexibility, more space for the economy to grow than we might have previously thought based on where inflationary pressures picked up in previous cycles."

On the economic rebound:

"In our outlook, particularly as you get to the second half of the year, and vaccines are really starting to have an impact, we should be able to get back to more normal activities, and particularly those hard-hit sectors should be able to get back to closer, something that's a lot closer to full operations."

"In terms of the reflation trade, to a large extent it really reflects the success of fiscal, monetary stimulus together with the arrival and now the rollout of new effective vaccines."

"We are still expecting a protracted recovery. The economy is going to be restructuring even as it's rebounding."

Managing the BOC in a pandemic:

"Most bank employees are working at home. I actually work mostly at home." About 100 staff come in to manage critical payment systems and financial-market operations, he said. "I have to congratulate our IT staff and our and our HR department. It's amazing what we can do from home."

"We're still dealing with an unprecedented shock. And I'll come back to where I started, I mean, we are completely focused on getting inflation back to target, supporting the recovery."

Priorities beyond monetary policy:

"We need to incorporate climate change in our analysis more fully."

"We need to continue to work to do more to engage Canadians, to listen to Canadians' concerns, to be relatable to Canadians. And then finally, we've launched a new diversity and inclusion strategy here at the bank, and I think it's very important that that we are more reflective of Canadians we serve."

"I'd like to see the Bank of Canada have a bigger voice at the global table. When you look at look at the biggest challenges, many of them are fundamentally global. We rely heavily on an open rules-based system of global trade and investment."