Bank of Canada Stands Firm on 2% Inflation Target Amid Trade Uncertainties

Bank of Canada Governor Tiff Macklem has reaffirmed the institution’s commitment to maintaining its 2% inflation target, signaling that no changes will be considered during the upcoming monetary policy framework review in 2026. This decision comes as global economic conditions grow increasingly complex, particularly due to unpredictable trade policies and tariff adjustments from the United States.

Macklem highlighted that recent steep tariffs imposed by the U.S. and the broader unpredictability of its trade policies have created significant challenges for the Canadian economy. These external pressures have not only reduced economic efficiency but also introduced heightened uncertainty, complicating the central bank’s efforts to maintain stability. According to Macklem, such disruptions could exacerbate supply constraints, potentially driving inflation higher in the coming years.

To navigate these uncertainties, the Bank of Canada has adopted a flexible approach to monetary policy. By employing scenario-based strategies, the bank aims to craft decisions that remain effective across a range of potential economic outcomes. This proactive stance underscores the BoC’s determination to balance inflation control with adaptability in a volatile global trade environment.