Bank of Canada Governor Wants to Keep 2% Inflation Target as U.S. Tariff Fears Grow
Reuters reports that Bank of Canada Governor Tiff Macklem wants to keep the country’s 2% inflation target unchanged when it is reviewed in 2026.
According to Reuters, the central bank and the finance ministry usually decide on the inflation goal together every five years, but this is the first time a governor has openly stated his position before official talks have begun.
Macklem, as Reuters explains, believes that now is not the time to change a strategy that has worked well for maintaining stable prices. He stressed this point during a speech in Mississauga, Ontario, where he said the focus should be on bigger risks, like the possibility of new U.S. tariffs on Canadian goods.
Reuters highlights that under the current system, the Bank of Canada aims to keep inflation within a range of 1% to 3%, with 2% as the ideal target.
The upcoming 2026 review will set the bank’s long-term priorities, but Macklem insists that keeping inflation steady should remain the top goal.
One of Macklem’s biggest concerns, as Reuters reports, is the potential economic damage if former U.S. President Donald Trump returns to power and imposes tariffs on all Canadian imports.
Reuters explains that Macklem warned such tariffs could permanently lower Canada’s economic output. He described it as more than just a short-term shock—calling it a “structural change” that could reshape Canada’s economy.
Reuters notes that Macklem also spoke about improving how inflation is measured, strengthening monetary policies, and understanding how interest rates affect the housing market.
He said that if Canada and the U.S. get into a trade war with tariffs and retaliations, Canada’s economy could suffer severely, with little to no growth in 2025 and 2026. Reuters also explains that such a situation could cause inflation to rise temporarily.
Macklem reassured Canadians, as Reuters points out, that the central bank would do everything necessary to prevent rising prices from turning into long-term inflation. He emphasized that monetary policies must make sure any increase in inflation is only temporary.
Reuters’ coverage makes it clear that Macklem is focused on keeping inflation stable and protecting Canada’s economy from external risks like U.S. tariffs.
His early statement about the 2026 review signals that he wants to avoid uncertainty and keep the 2% inflation target unchanged.
Credit : Reuters