BoC Governor Macklem says Canada being buffeted by global events and geopolitical uncertainties, higher global energy prices are pushing inflation up, and monpol is focused on ensuring jump in energy prices does not turn into persistent inflation

Says they have three key messages:

• 1) Canada is being buffeted by global events and geopolitical uncertainties, but our economy is growing and is expected to continue to grow.
• 2) After more than a year with inflation close to the 2% target, higher global energy prices are pushing inflation up. The surge in gasoline prices combined with still-elevated food price inflation is squeezing more Canadians.
• 3) Monetary policy is focused on ensuring the jump in energy prices does not turn into persistent inflation, while helping the economy adjust to global headwinds. We are committed to keeping inflation low and stable over time.

MIDDLE EAST:

• Since previous forecast in January, the war in the Middle East has sent global energy prices sharply higher, increased financial market volatility and disrupted shipping for fertilizer and other commodities. This has lowered the outlook for global growth while boosting inflation.

GROWTH:

• Growth looks to have resumed after contracting at the end of 2025. Consumer and government spending are contributing to growth, while US tariffs and trade uncertainty are weighing on exports and business investment. 
• The conflict in the Middle East will affect the composition of growth, but the impact on overall growth is expected to be small because higher global oil prices increase the value of our energy exports even as they squeeze consumers and many businesses.

POLICY:

• Our baseline forecast assumes oil prices will come down and US tariffs will remain at the current levels. If this holds true, a policy rate close to current settings looks appropriate to support adjustment in the economy and return inflation to target.
• There may still be a need to adjust the policy rate depending on how the risks evolve. But if the economy evolves broadly in line with the base case, changes in the policy rate can be expected to be small.
• However, uncertainty is unusually elevated, and there are many possible outcomes. Monetary policy may need to be nimble.