By Erik Hertzberg

(Bloomberg) — Bank of Canada Governor Tiff Macklem said central banks around the world are positioned differently when it comes to economic slack and inflation, and their responses to the oil price shock are likely to vary.

“We’re all feeling like you don’t want to jump too early and raise interest rates and lower growth, particularly when growth is already weak,” Macklem told reporters in a callback from his meetings at the International Monetary Fund in Washington.

“On the other hand, you don’t want to be late and let inflation get a hold and get entrenched.”

At their March meeting, policymakers led by Macklem said they saw inflation close to the 2% target, the economy in excess supply and weren’t expecting to see a rapid pass-through of higher energy prices to goods and services.

The bank held the policy rate at 2.25% at that meeting, saying it would look through the initial price shock from higher oil, but was prepared to act if it saw spreading second-round effects, particularly in core inflation. 

Macklem also said he expects a “large” headline inflation figure when Statistics Canada reports the March data on Monday, though he still sees the rate below 3%, the top of the central bank’s target range.

While a de-anchoring of medium and longer-term inflation expectations would be troubling, Macklem said it makes sense that firms and consumers are expecting an immediate jump in prices because of the oil shock, especially through gasoline.

“We’re not surprised and we’re not even that worried if we see near-term inflation expectations going up,” he said. At the same time, he noted that people may be more sensitive to inflation after the recent spike in prices after COVID-19. “Their expectations could shift faster,” he said.

Combined, the comments suggest the central bank wants more evidence on how higher energy prices will pass through to broader inflationary pressures before adjusting borrowing costs. Economists surveyed by Bloomberg expect the central bank to hold borrowing costs steady through 2026, but markets are pricing at least one rate hike.

Macklem also said he spoke to Federal Reserve Chair Jerome Powell about the U.S. approach to Anthropic PBC’s Mythos artificial-intelligence model. The Bank of Canada governor also heads a key committee of the Financial Stability Board, and it is gathering information from members about the risks posed by the platform.

“It’s early days, and I don’t think anybody knows the full implications at this point. That’s precisely what everybody’s trying to get to the bottom of,” Macklem said. 

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Last modified: April 18, 2026