Bank of Canada head Tiff Macklem says mandate should evolve in a ‘shock-prone’ world

Bank of Canada governor Tiff Macklem was set to declare victory last year on inflation and a soft landing for the economy until Donald Trump's tariffs struck. Photo by TONY CALDWELL /Postmedia

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OTTAWA — Tiff Macklem is wearing an Edmonton Oilers pin as he reflects on coming very close to beating big odds.

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It’s a significant day for the governor of the Bank of Canada: he’s just laid out his reasons to the entire country and a global audience for keeping the central bank’s benchmark interest rate steady for a second straight time.

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That night is also Game 1 of the NHL’s Stanley Cup finals; Macklem ends his press conference with a hearty “Go Oilers!”

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It’s a rematch from last year’s heartbreak, when the Oilers came oh-so-close to mounting a seemingly impossible four-game comeback against the Florida Panthers, only to fall short by a single goal in Game 7.

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Macklem, too, was almost safe to declare victory last year.

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He had just about secured a coveted “soft landing” for Canada’s economy — a rare feat that sees restrictive monetary policy bring down surging levels of inflation without tipping the economy into a prolonged downturn.

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“We got inflation down. We didn’t cause a recession,” Macklem said in an interview with The Canadian Press after the rate announcement Wednesday.

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“And, to be frank, until President (Donald) Trump started threatening the economy with new tariffs, we were actually seeing growth pick up.”

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Fresh out of one crisis, the central bank now must contend with another in U.S. tariffs.

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Five years into his tenure as head of the Bank of Canada, Macklem said he sees the central bank’s role in stickhandling the economy — as well as Canada’s role on the world stage — evolving.

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Many Canadians have become more familiar with the Bank of Canada in recent years. After the COVID-19 pandemic recovery ignited inflation, the central bank’s rapid tightening cycle and subsequent rate cuts were top-line news for anxious Canadians stressed about rising prices and borrowing costs.

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That was all in pursuit of meeting the central bank’s inflation target of two per cent, part of a mandate from the federal government that’s up for review next year.

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Macklem said the past few years have led the Bank of Canada to scrutinize some of its metrics, like core inflation and how it responds to supply shocks in the economy.

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But he defends keeping the bank’s inflation target, particularly at a time of global upheaval.

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“Our flexible inflation targeting framework has just been through the biggest test it’s ever had in the 30 years since we announced the inflation target,” he said.

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“I’m not going to pretend it’s been an easy few years for anybody. But I think the framework has performed well.”

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Macklem said, however, that he sees room to build out the mandate to address other areas of concern from Canadians, such as housing affordability.

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Whether it’s the high cost of rent or a mortgage, or surging prices for groceries and vehicles, Macklem said the past few years have been eye-opening to Canadians who weren’t around the last time inflation hit double digits in the 1980s.