Bank of Canada Indicates Change in Rate Setting Approach Amid Tariff Uncertainty

The head of the Bank of Canada is indicating a change in how the central bank determines its key interest rate due to trade uncertainty with the United States, which is complicating long-term forecasting.

Tiff Macklem suggests that monetary policymakers may need to make quick decisions regarding interest rates instead of relying on distant forecasts to remain flexible and adaptable.

Macklem is currently in Calgary addressing the city’s economic development group.

In his prepared statement, Macklem mentioned that the central bank is aiming to establish monetary policy that can adapt to various scenarios related to Canada’s tariff dispute with the U.S., rather than sticking to a single forecast that could be incorrect if circumstances change.

Tariffs have been introduced and modified multiple times this month, and the intentions of U.S. President Donald Trump are not entirely clear. This uncertainty is already negatively impacting the Canadian economy.

The Bank of Canada recently reduced its benchmark interest rate by a quarter-point to 2.75 percent earlier this month, with the next decision scheduled for April 16.

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