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Tiff Macklem Bank of Canada Governor Tiff Macklem is seen during a news conference in Ottawa on Wednesday, Jan. 28, 2026. THE CANADIAN PRESS\/Adrian Wyld <\/p>\nBank of Canada Governor Tiff Macklem on whether the outcome CUSMA renegotiations will impact the future interest rate decisions. <\/p>\n
OTTAWA — Bank of Canada Governor Tiff Macklem told Reuters he saw unusual potential for a new shock to the economy, given elevated geopolitical risks and U.S. trade policy.<\/p>\n
Macklem said in an interview on Wednesday that more factors than usual could deter Canada from achieving the bank\u2019s economic forecasts, citing U.S. President Donald Trump\u2019s threats toward Greenland, his removal of Venezuela\u2019s leader, and repeated threats to impose more tariffs on Canada.<\/p>\n
\u201cThere is unusual potential for a new shock, a new disruption,\u201d Macklem said. \u201cGeopolitical risks are elevated.\u201d<\/p>\n
He cited attacks on the U.S. Federal Reserve\u2019s independence as another risk this year, and said he spoke to Fed Chair Jerome Powell recently. Trump has demanded publicly that the Fed cut interest rates.<\/p>\n
Forecast vulnerable<\/p>\n
The BoC, which on Wednesday said it would keep its interest rate on hold, released new projections for the economy and inflation in its monetary policy report.<\/p>\n
These forecasts for modest growth in 2026 and 2027 were largely similar to its estimates released in October, but Macklem believes there are more risks these projections could go wrong.<\/p>\n
\u201cWe are feeling like there are more things that can go wrong around that forecast. That forecast is more vulnerable,\u201d he said.<\/p>\n
Exemplifying such potential shocks, Trump said on Saturday he would impose a 100 per cent tariff on Canada if it follows through on a trade deal with China.<\/p>\n
Economists interpreted Macklem\u2019s comments at an earlier press conference as tilted toward the need for stimulating growth, predicting that the tone had become more inclined toward a cut to stimulate the economy.<\/p>\n
Tiff Macklem Bank of Canada Governor Tiff Macklem is seen during a news conference in Ottawa on Wednesday, Jan. 28, 2026. THE CANADIAN PRESS\/Adrian Wyld <\/p>\n
Money markets are pricing in no cuts through 2026, but investors see a higher chance of a hike in the last quarter.<\/p>\n
When asked whether he thinks risks are more tilted toward a cut or a hike later in the year, Macklem cited uncertainty.<\/p>\n
\u201cIn order to comment on the balance, you need to be able to assign probabilities to the risks. And, to be honest, I think we\u2019re finding that difficult,\u201d he said.<\/p>\n
The latest tariff threat from the White House and the review of the United States-Mexico-Canada free trade deal pose obvious risk to the bank\u2019s outlook, besides all the other uncertainties, he added.<\/p>\n
Federal Reserve<\/p>\n
Macklem said he has privately spoken with Powell and told him he was doing a good job under difficult circumstances.<\/p>\n
The chiefs of many of the world\u2019s \u200bmajor central banks, including Canada\u2019s, issued a joint statement in support of Powell this month after Trump\u2019s administration threatened him with a \u200bcriminal indictment.<\/p>\n
\u201cA Federal Reserve that is providing stability to the U.S. economy is good for the U.S. economy; it\u2019s good for the Canadian economy,\u201d Macklem said. \u201cA Federal Reserve that is not delivering predictability isn\u2019t going to be good for anybody.\u201d<\/p>\n
He said the world was concerned about the safety of U.S. assets.<\/p>\n
Foreign investors want exposure to U.S. equities but hedge against the currency risk, which pulls the value of the dollar down.<\/p>\n
\u201cThe unpredictability of U.S. policy has dented the U.S. dollar as the global safe asset. There\u2019s not a lot of great alternatives,\u201d he added.<\/p>\n
Canadian economy is showing resilience overall: Bank of Canada on interest rate decision FULL UPDATE: Bank of Canada governor Tiff Macklem discusses why the key interest rate remained unchanged despite trade concerns and economic uncertainty. <\/p>\n
Reporting by Promit Mukherjee, Maria Cheng, Kyaw Soe Oo and David Ljunggren; Editing by Caroline Stauffer, Rod Nickel, Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"Bank of Canada Governor Tiff Macklem on whether the outcome CUSMA renegotiations will impact the future interest rate…\n","protected":false},"author":2,"featured_media":441012,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[712,45,49,48,46],"class_list":["post-441011","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-apple-news","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/441011","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=441011"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/441011\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/441012"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=441011"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=441011"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=441011"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}