Tariff War Threatens to Fuel Canadian Inflation, Macklem Warns

The ongoing trade disputes and tariff wars pose a significant risk to Canada’s inflation outlook, Bank of Canada Governor Tiff Macklem has warned. He emphasized that escalating trade tensions could push prices higher, complicating the central bank’s efforts to control inflation. 

Macklem’s comments highlight the interconnectedness of global trade and its impact on domestic economies. Macklem acknowledged that the Canadian economy has shown resilience in the face of global headwinds.

However, he stressed that rising protectionism and trade barriers could disrupt supply chains and lead to higher prices for consumers. He reiterated the Bank of Canada’s commitment to maintaining price stability and keeping inflation close to its 2% target.

The governor’s warning underscores the challenges facing central banks in a world of increasing geopolitical uncertainty. The potential for further trade disruptions and the risk of escalating tariff wars add to the complexity of managing monetary policy.

The Bank of Canada will need to carefully assess these risks as it makes future interest rate decisions.