Bank of Canada Governor Tiff Macklem says the central bank will take a “humble” stance as it resumes formal economic forecasting later this month, citing persistent global trade uncertainty.
The Bank plans to release a new economic outlook alongside its upcoming interest rate decision on October 29—its first forecast since the start of the year, when U.S. tariff tensions clouded the economic landscape.
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Speaking from Washington, D.C., where he is attending the International Monetary Fund’s annual meetings with fellow central bankers and policymakers, Macklem noted that while trade uncertainty has eased somewhat since the spring, significant risks remain.
“Uncertainty about the stability and trajectory of the global economy is still high, but we have avoided the worst-case scenarios,” he said, referencing the IMF’s latest World Economic Outlook.
Macklem cautioned that a renewed escalation between the U.S. and China would have “very significant” global repercussions. He added that domestic attention is now shifting toward next year’s review of the Canada–U.S.–Mexico Agreement (CUSMA), which currently allows most Canadian exports to enter the U.S. tariff-free.
With these risks in play, Macklem emphasized the need for cautious forecasting: “We will need to be humble about our forecasts, and we will continue to put a lot of emphasis on the risks.”
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The Bank of Canada will soon have fresh data to assess, including its quarterly business and consumer surveys and Statistics Canada’s September inflation report. According to Macklem, businesses have reported that lingering uncertainty is discouraging investment and hiring.
However, he highlighted the artificial intelligence boom as a counterbalancing force, particularly in the U.S., where it has spurred investment despite broader headwinds. “AI has the potential to be an important tailwind, increasing productivity and sustaining non-inflationary growth,” Macklem said, while noting the need to better understand AI’s complex macroeconomic and labour market impacts.
On the domestic front, Canada’s labour market has softened despite a surprise gain of 60,000 jobs in September. Macklem noted that the increase followed job losses exceeding 100,000 in July and August, underscoring the importance of looking at broader trends rather than single monthly data points.
Labour market weakness was one factor behind the Bank’s quarter-point rate cut last month. Macklem remained non-committal on the next policy move but said the decision will depend on how tariffs and uncertainty affect exports, investment, inflation, and consumer spending—which has shown some recent resilience.
“Let’s get all the data, let’s look at the forecast, let’s have the deliberations and we’ll come to our best assessment and a decision on Oct. 29,” he concluded.
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