Prime Minister Carney outlines the \u2018four-pillar\u2019 defence spending plan that looks to strengthen military capabilities and diversifying defence partners. <\/p>\n
OTTAWA \u2014 Bank of Canada governor Tiff Macklem says he\u2019s \u201cencouraged\u201d by the federal government\u2019s efforts to diversify the economy and protect it against increasingly common shocks to global trade.<\/p>\n
He also says Ottawa\u2019s fiscal update, tabled earlier this week, will likely have little impact on the central bank\u2019s forecasts for inflation.<\/p>\n
Macklem made the comments in an interview with The Canadian Press on Wednesday after the Bank of Canada held its benchmark interest rate steady at 2.25 per cent in a fourth consecutive decision.<\/p>\n
The central bank updated its outlook for the economy that same day, and Macklem flagged a pair of outstanding risks to the forecast: the energy price spike from the war in Iran; and the looming review of the Canada-U.S.-Mexico trade agreement.<\/p>\n
Depending on how those risks play out \u2014 whether they push inflation or economic growth in one direction or another \u2014 he said the Bank of Canada is in the unusual stance where its policy rate might have to go higher, lower or just hold steady for the foreseeable future.<\/p>\n
Macklem maintains that the bank will support the economy where it can, but its mandate remains keeping inflation anchored at two per cent.<\/p>\n
\u201cWe are in a more shock-prone world,\u201d he said in the interview.<\/p>\n
\u201cOur commitment is, we will be a source of stability. We will bring inflation back to target. It is essential that Canadians remain confident in price stability.\u201d<\/p>\n
Bank\u2019s guidance is limited<\/p>\n
The Bank of Canada governor has acknowledged that the bank is limited in what it can do to guide the economy through structural transitions, such as protectionist U.S. trade policy or disruption from artificial intelligence.<\/p>\n
That\u2019s more a job for fiscal policy from governments, Macklem has argued, not the blunt tool of the Bank of Canada\u2019s benchmark interest rate.<\/p>\n
The central bank operates independently from the federal government to avoid perceptions of political pressure when setting monetary policy.<\/p>\n
But Macklem and his colleagues at the bank are not shy about identifying what they see as long-standing vulnerabilities in the economy, and regularly sharing those perspectives in speeches, press conferences and appearances at government committees.<\/p>\n
\u2018Renewed momentum\u2019<\/p>\n
He said he sees \u201crenewed momentum\u201d to tackle some of these issues, which have been blamed in part for holding back business investment and productivity growth in the country for more than a decade.<\/p>\n
Overreliance on the United States is one area where Macklem sees room to diversify Canada\u2019s exports. Boosting interprovincial trade by removing barriers and harmonizing regulations between provinces also strikes him as a top priority to stimulate growth.<\/p>\n
\u201cIt\u2019s been so much easier to send stuff north-south to the U.S. than to send it across the country. So, as a result, we don\u2019t have as well developed an east-west transportation corridor as we could,\u201d Macklem said.<\/p>\n
Macklem also travels regularly in his role as the head of Canada\u2019s central bank, and he said he hears from international investors that there\u2019s plenty of interest in Canada. What gets in the way of those capital flows, they tell him, are the often long timelines for getting projects approved in the country.<\/p>\n
\u201cThese regulatory approvals, they are in place for well-intended reasons, but they\u2019re having unintended consequences. If we can streamline those, provide more predictability, I think you will see more foreign investment into Canada, which will also boost our economy,\u201d Macklem said.<\/p>\n
\u2018Not going to get fixed overnight\u2019<\/p>\n
Many of the hang-ups that are top of mind for the Bank of Canada governor echo those raised on Parliament Hill lately.<\/p>\n
Since becoming prime minister a little over a year ago, Mark Carney \u2014 who held Macklem\u2019s position for five years starting in 2008 \u2014 has tried to diversify Canadian exports, knock down interprovincial trade barriers and court international investment during his travels abroad.<\/p>\n
Macklem reiterated during the interview that he does not comment on specific fiscal policy proposals or actions taken by the government.<\/p>\n
But when asked whether he felt the federal government was putting the economy on a track to be more resilient to global shocks, the central bank governor said he is \u201cencouraged by the direction.\u201d<\/p>\n
\u201cThese things are not going to get fixed overnight,\u201d Macklem said.<\/p>\n
\u201cIt\u2019s going to take a determined plan \u2026 and a willingness to keep the momentum. But yes, I think the direction is encouraging and now a lot of it is about execution.\u201d<\/p>\n
Carney\u2019s critics have argued the Liberal government continues to lag behind on approving new major projects despite plenty of talk about an urgent pace of building. Conservative Leader Pierre Poilievre has chastised Carney over declaring a \u201crupture\u201d in the Canada-U.S. relationship and for running deeper deficits, which he says are fuelling inflation domestically.<\/p>\n
Inflation forecast<\/p>\n
Inflation stood at 2.4 per cent in March as the global oil price shock hit gas pumps across the country and still-stubborn food inflation kept costs up at the grocery store.<\/p>\n
The Bank of Canada\u2019s baseline forecasts released Wednesday call for inflation to peak around three per cent in April before cooling back to the bank\u2019s two per cent target in early 2027. That outlook assumes global oil prices ease from their current levels in the months to come.<\/p>\n
But a scenario that sees the cost of a barrel of oil remain at around US$100 through the rest of the year would likely result in a broader inflationary bout that pushes the Bank of Canada to hike its key rate multiple times, central bank officials warned.<\/p>\n
The Bank of Canada\u2019s latest forecasts were released a day after the release of the government\u2019s spring economic update and didn\u2019t incorporate all of Ottawa\u2019s new spending plans.<\/p>\n
Macklem said the full spring economic statement will be incorporated in the central bank\u2019s July forecasts. But he also noted that some major spending items, such as waiving the federal fuel excise tax and boosting a tax benefit for lower-income households, were already announced heading into this week and were baked into the Bank of Canada\u2019s outlook.<\/p>\n
Asked whether the spring economic update would have implications for Canada\u2019s inflation outlook, Macklem said the changes \u201care not macro-economically significant\u201d and he doesn\u2019t expect there to be a \u201cbig impact on the projection.\u201d<\/p>\n
This report by The Canadian Press was first published May 1, 2026.<\/p>\n
Craig Lord, The Canadian Press<\/p>\n","protected":false},"excerpt":{"rendered":"Prime Minister Carney outlines the \u2018four-pillar\u2019 defence spending plan that looks to strengthen military capabilities and diversifying defence…\n","protected":false},"author":2,"featured_media":27508,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[525,235,290,3089,61,113,401,3090],"class_list":{"0":"post-27507","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ottawa","8":"tag-business","9":"tag-economy","10":"tag-national","11":"tag-oilgas","12":"tag-ottawa","13":"tag-politics","14":"tag-trade","15":"tag-utilities"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/27507","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=27507"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/27507\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/27508"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=27507"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=27507"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=27507"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}