Bank of Canada’s Tiff Macklem says tariff threat adds to central bank challenges

Bank of Canada governor Tiff Macklem says central banks face an increasingly difficult job as the country faces a maelstrom from potential U.S. tariffs, technological disruptions, extreme weather and global political upheaval.

Macklem says monetary policy can help mitigate the short-term impacts of tariffs, but can’t address every challenge facing an economy.

He made the comments virtually as part of a panel at the BIS Chapultepec Conference in Mexico City.

The Bank of Canada has been cutting its key interest rate since the middle of last year to spur spending and boost the economy.

However, the country faces significant uncertainty in the coming months amid a month-long truce on tariffs from the U.S. as the federal government seeks to prevent U.S. President Donald Trump from enacting punishing duties.

Macklem says the world is increasingly vulnerable to shocks amid higher long-term interest rates, slower economic growth, war and rising trade protectionism, as well as the rise of artificial intelligence technology and more frequent catastrophic weather events.

This report by The Canadian Press was first published Feb. 6, 2025.

Rosa Saba, The Canadian Press