Bank of Canada governor Tiff Macklem says businesses ought to \u201clean into\u201d the forces disrupting the economy or risk failing to adapt.<\/p>\n
Macklem gave a speech to the Empire Club of Canada in Toronto on Thursday where he told the business crowd how \u201cstructural changes\u201d like U.S. tariffs, artificial intelligence and slowing population growth are affecting the economy.<\/p>\n
He said in prepared remarks that while businesses are holding back investment and hiring plans in the face of U.S. protectionism, they\u2019ve also been slow to adopt new AI technologies.<\/p>\n
The Bank of Canada is forecasting weak growth in the economy over the next two years as businesses adjust to those disruptive forces. Macklem sought to rally the business crowd to embrace the changes already underway in the economy.<\/p>\n
\u201cWe can be victims of U.S. tariffs and AI disruption, or we can lean into structural change, expand our internal market, diversify our trade, embrace new technology and raise our productivity,\u201d he said.<\/p>\n
Macklem also warned that slowing immigration and a declining fertility rate are putting Canada\u2019s population on a slower growth track in the coming years.<\/p>\n
As a result, he said the Bank of Canada expects the labour force will \u201chardly grow at all\u201d over the next few years.<\/p>\n
\u201cThat means fewer new consumers and workers in the economy, which lowers our economic potential,\u201d Macklem said.<\/p>\n
The central bank still expects businesses to be restrained in their hiring this year, thanks mostly to an uncertain outlook. With muted labour force growth in the forecast, the Bank of Canada is not expecting the unemployment rate to trend much higher than the 6.8 per cent recorded in December.<\/p>\n
Macklem said the central bank expects gradual improvement in the labour market in the years to come, but the structural changes affecting the economy mean the improvement could be uneven across sectors and occupations.<\/p>\n
The Bank of Canada is not seeing much impact from AI in the labour market, Macklem said, though there is some early evidence that the technology is reducing the number of entry-level positions, which may in turn be boosting youth unemployment. Right now, it\u2019s hard to separate the effects of AI from trade and demographic shifts in the jobs market, he noted.<\/p>\n
The economic transition the central bank sees on the horizon could arrive sooner if trade uncertainty eases and businesses move quickly to invest in new technology and markets, Macklem said. He also warned that the economy could fail to adapt, and GDP and productivity might not recover, driving worse job and wage growth and a less affordable Canada.<\/p>\n
\u201cThat\u2019s what we really can\u2019t afford. That\u2019s why we need to lean into this structural change,\u201d he said.<\/p>\n
Macklem said the Bank of Canada, which held its policy rate steady at 2.25 per cent last week, will work to smooth out these structural changes but noted that monetary policy cannot directly address any of the forces reshaping the economy.<\/p>\n
This report by The Canadian Press was first published Feb. 5, 2026.<\/p>\n
Craig Lord, The Canadian Press<\/p>\n","protected":false},"excerpt":{"rendered":"Bank of Canada governor Tiff Macklem says businesses ought to \u201clean into\u201d the forces disrupting the economy or…\n","protected":false},"author":2,"featured_media":455986,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-456525","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/456525","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=456525"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/456525\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/455986"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=456525"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=456525"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=456525"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}