Bank of Canada Governor Tiff Macklem warned that persistently high global energy prices will push up Canada's inflation outlook, saying global resilience is “under strain” after a series of shocks, including wars in Iran and Ukraine and trade disruptions. He noted that strategic oil reserves are being depleted and that Middle East escalation, damage to Gulf refining capacity and the closure of the Strait of Hormuz mean no relief is in sight for oil prices. Canadian inflation has held at 3% for two months, and Macklem expects the outlook to be “quite a bit higher” than the July forecast, which had seen it cooling to about 2.5% in the second half of the year. The bank will release new forecasts with its Oct. 28 rate decision and could raise rates if price pressures spread, while Macklem expressed confidence in Canada, citing a stable dollar and early signs of investment recovery.
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Original headline: Bank of Canada Macklem warns global resilience under strain
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Bank of Canada Governor Tiff Macklem said the central bank will raise its quarterly inflation forecast considerably this month. He attributed the revision to persistently high prices for crude oil and petroleum products, which are intensifying inflationary pressures. The new inflation and growth forecasts will be factored into the bank's interest-rate decision on October 28.
- Bank of Canada Macklem warns global resilience under strain
Bank of Canada Governor Tiff Macklem said persistently high global energy prices will push up Canada's inflation outlook, adding that global resilience is under strain as shocks persist. Speaking on the sidelines of the IMF meetings in Bangkok, he noted that strategic oil reserve releases are being depleted, and that Houthi attacks on Saudi Arabia, damage to Gulf refining capacity and the closure of the Strait of Hormuz leave no relief in sight for oil prices. Canadian inflation has held at 3% for two months, and Macklem expects the outlook to be quite a bit higher than the July forecast of about 2.5% for the second half of the year. The bank will release new forecasts with its October 28 rate decision and is prepared to raise rates if price pressures spread. Macklem nonetheless expressed confidence in Canada, citing a relatively stable Canadian dollar and early signs of recovery and investment.
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