Macklem says new US tariffs could lower Canada's Q4 growth to below 1%

Bank of Canada Governor Macklem stated on Monday that new US tariffs could cause Canada’s economic growth in the fourth quarter to fall below 1%. Macklem noted that, when assessing interest rate policy, the central bank needs to consider two factors: slower economic growth could drive inflation down, but rising oil prices caused by the Middle East conflict could, conversely, push inflation higher. He pointed out that Canada’s current annual inflation rate stands at 3%, far above the central bank’s 2% target; if oil prices remain around $100 per barrel, the inflation rate may climb slightly further. The Canadian economy rebounded in the second quarter, with an annualized growth rate reaching 3.3%. After nearly 18 months of impact from US tariffs, businesses and households began adjusting their plans and resumed investment and consumption arrangements. However, as potential trade agreement talks between the two countries broke down, US-Canada relations have further deteriorated, and the United States has launched a new round of tariff measures. Macklem said, “This latest escalation could once again cause firms to delay investment and hiring decisions.” He stated that if the new tariffs persist, Canada’s fourth-quarter economic growth could be roughly halved, dropping below 1%.