Bank of Canada Governor's Remarks

By David Ljunggren

OTTAWA, Dec 16 (Reuters) – Bank of Canada Governor Tiff Macklem expressed concerns about the increasing susceptibility to economic shocks during his last scheduled speech of the year at the Greater Vancouver Board of Trade.

Macklem highlighted key factors impacting jobs, growth, and inflation, including deglobalization, demographic shifts, digitalization, and decarbonization. He noted the rise of trade protectionism and economic fragmentation as significant concerns.

> "The future looks more uncertain and more prone to shocks than we would all like. We need to be prepared. And that work is underway," he stated.

For 2025, the central bank's priorities involve collaborating with international partners, enhancing analytical capabilities, using improved tools for responding to shocks, and ensuring an effective monetary policy framework.

Macklem described how increased sovereign debt, long-term interest rates, and slow economic growth have heightened vulnerabilities, worsened by geopolitical tensions and protectionism.

> "The democracies of the G7 will be stronger if we confront our shared economic security issues together," he added.

Recently, the bank cut its key policy rate by 50 basis points to 3.25% to combat slower growth, signifying a slower pace for future cuts. Macklem reaffirmed that inflation has reached the bank's target of 2%.

> "Monetary policy has worked to restore low inflation. Interest rates have come down substantially, and household spending has begun to pick up. But I am not here to give a victory speech," concluded Macklem.