With one year left for Macklem, it’s still one battle after another
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- Bank of Canada held its benchmark interest rate steady at 2.25% on Wednesday for the sixth consecutive decision, with headline inflation expected to decline to around 2.5% by August from 3.2% in May
- Tiff Macklem said surging demand for AI-related infrastructure will push consumer prices up in the near term, though he noted no one knows when the technology will shift from inflationary to disinflationary
- Bank of Canada is rolling out a new economic forecasting model in coming months to trace how shocks in one sector ricochet through supply chains, after models failed to anticipate the 2021-2022 inflation surge
- Kevin Warsh is changing how the Federal Reserve communicates by declining forward guidance on rate trajectories and has struck five task forces re-examining the Fed's inflation targeting framework and use of data
- Brent crude hit US$88 on Friday, up roughly 20% over two weeks after US-Iran fighting resumed around the Strait of Hormuz, and Macklem said sustained high oil prices could force rate hikes
- Trump administration declined to renew the USMCA for another 16 years on July 1, shifting the trade pact to annual reviews until 2036, though Macklem noted it had effectively been under 'weekly reviews' already
- G20 is 'much less effective' than during the 2008-09 crisis response, Macklem said, warning that international cooperation is breaking down precisely when building financial stability risks demand it
Why it matters: Macklem is steering Canada's central bank through overlapping shocks — AI investment mania, a weakened USMCA framework, a 20% oil price spike in two weeks, and a Fed chair who is rewriting how the world's most influential central bank communicates — while building forecasting tools and institutional communication norms that will outlast his seven-year term.
