PROMIT MUKHERJEE and DAVID LJUNGGREN
Ottawa, February 21 (Reuters) – The 2% inflation objective of the Bank of Canada should be maintained in an examination established for 2026, Governor Tiff Macklem said on Friday, saying the central bank should focus on risks such as the imposition of American prices.
The Bank and the Ministry of Finance jointly examine the objective every five years and officially announce a decision. Macklem’s remarks have marked the first time that a governor said what the target should be before the consultations begin.
“In my opinion, this is not the time to question the anchor that has proven to be so effective in reaching price stability,” said Macklem during a speech in Mississauga, Ontario.
The mandate of the bank under the current framework of monetary policy is to maintain inflation in the midst of a target range from 1% to 3%.
The examination in 2026 of the framework of monetary policy will produce an agreement on the priorities of the bank.
“With commercial conflicts at our door, we need to focus our resources on the most urgent and important problems for our executive exam,” said Macklem.
He reiterated that if US President Donald Trump was going forward with a threat to slap prices on all imports from Canada, the economic effect would be serious.
“We can possibly find our current growth rate, but the level of production would be permanently lower,” said Macklem, referring to the last economic modeling of the bank. He continued: “It’s more than a shock – it’s a structural change.”
He said that the bank would examine if it needed what he called a richer game book for monetary policy, how inflation could be better measured and the interaction of monetary policy with housing.
Macklem said that the American prices and the subsequent reprisals of Canada could almost eliminate any interior growth in 2025 and 2026 and cause a peak peak of inflation.
“What monetary policy can – and must do – is to ensure that higher prices do not become continuous inflation,” he said.
“In simple terms, monetary policy must ensure
The increase in inflation is temporary. “”
((Reuters Ottawa office))))
Keywords: Canada Cenbank /
