Macklem says Canada must lean into economic transition and downplays likelihood of rate cuts

Bank of Canada Governor Tiff Macklem said Canada should 'lean into' structural changes driven by U.S. protectionism, artificial intelligence and slower population growth, and he signalled the central bank is unlikely to cut interest rates soon.

Bank of Canada Governor Tiff Macklem told a Bay Street audience that Canada must "lean into" structural economic changes. He identified U.S. protectionism, artificial intelligence and a sharp slowdown in population growth as the main forces reshaping the economy. Mr. Macklem said the Bank of Canada can only play a secondary role in that transition and warned against misdiagnosing structural weakness as cyclical demand weakness. Key points: - Macklem described three structural forces affecting Canada: U.S. protectionism, AI-driven technology and slower population growth. - He cautioned that lowering interest rates to offset structural weakness risks stoking future inflation and delaying needed adjustment. - The Bank of Canada last held its policy rate at 2.25 per cent and signalled it expects to remain on hold unless there are significant economic surprises. Summary: The speech framed Canada’s current softness as partly structural and indicated the central bank is disinclined to provide additional monetary stimulus. Undetermined at this time.