Macklem said inflation remains too high in Canada, concentrated in gasoline and
energy prices. He identified developments in the Middle East — and how long and
how far oil prices stay elevated — as the main upside risk and said the BOC will
closely monitor inflation data and act accordingly. The central bank’s tolerance
for high inflation is limited; if inflation is judged persistent, multiple rate
hikes may be required, though rate increases are not the only response and the
BOC is prepared to adjust policy as needed. He said the Canadian economy is
holding up amid a new phase of trade tensions, but recent U.S. tariff measures
will weigh on Q4 growth. Macklem also noted spillovers from higher global bond
yields into Canada and said those effects will be factored into policy
decisions; if policy fails to meet its objectives, markets will reprice.
