Tiff Macklem Warns US Tariffs Could Halve Canada Growth

Bank of Canada Governor Tiff Macklem warned that new United States tariffs could roughly halve Canada's fourth-quarter economic growth, potentially pushing the rate below 1%. While some Canadian businesses have started adapting to the tariffs, the central bank is managing competing risks between a growth slowdown and rising inflation.

Macklem noted that oil prices near $100 a barrel and increased fuel costs resulting from damaged global refining capacity are expected to edge inflation upward in the coming months. He stated that the bank intends to look beyond the initial shock of oil prices to avoid raising interest rates and restraining growth if inflationary pressures remain contained.

Despite this cautious approach, the Bank of Canada will respond with rate hikes if inflationary pressures become persistent.