Bank of Canada Governor Tiff Macklem signals potential consecutive rate hikes if elevated oil prices sustain broader inflation pressures.
The Bank of Canada held its policy rate at 2.25% last week but warned that persistent high oil prices could trigger further tightening. Governor Tiff Macklem indicated consecutive rate increases may be necessary if energy costs drive broader inflation beyond current projections.
Inflation rose to 2.4% in March from 1.8% in February, primarily due to higher gasoline prices. The Bank expects inflation to peak near 3% in April before easing back to its 2% target by early next year. GDP growth is projected at 1.2% in 2026, with unemployment remaining between 6.5% and 7%.
Macklem cited Middle East conflicts as a key driver of rising energy prices, increased market volatility, and disrupted commodity shipping, which could weigh on global growth.