BoC’s Macklem signals more rate hikes as Oil fuels inflation risks
On Tuesday, Bank of Canada (BoC) Governor Tiff Macklem appeared before the House of Commons Standing Committee on Finance and said that “further rate hikes may be needed” because the war in the Middle East is keeping energy prices “higher for longer.”
Bank of Canada Governor Tiff Macklem signaled the possibility of additional interest rate hikes at a recent appearance before the House of Commons Standing Committee on Finance. He attributed the ongoing inflationary pressures to the Middle East conflict, which has caused energy prices to remain elevated. According to his prepared remarks, the Consumer Price Index (CPI) is projected to reach 3.5% by the end of the year, and remain above the 3% threshold through 2027.
Macklem further predicts that the CPI will return to around 2% by mid-2028. In terms of economic growth, he anticipates GDP to grow by 1% in 2026 and approximately 2% in both 2027 and 2028. The BoC's primary mandate is to maintain price stability, which currently includes an inflation target of 1-3%. The Bank primarily achieves this objective through adjusting interest rates.
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