Bank of Canada May Change its Strategy and Offer a Range of Projections

The Bank of Canada may provide a range of economic forecasts instead of a single projection due to uncertainty over the impact of U.S. tariffs, Governor Tiff Macklem said on Thursday. The central bank will release its quarterly monetary policy report on April 16, offering growth predictions for the coming months and years.
Macklem explained that if the report were prepared today, it would include a range of possible outcomes rather than a single central forecast, due to the unpredictable effects of U.S. tariffs. The Bank of Canada last updated its forecasting approach five years ago in response to the COVID-19 pandemic.
Once the uncertainty around tariffs is resolved, the Bank of Canada will return to its usual forecasting practice, Macklem added. In its last report, the Bank projected the economy would grow by 1.8% in 2025 and 2% in the first quarter of this year, on an annualized basis. However, Macklem emphasized that the governing council has low confidence in these projections.
He explained that due to the unknown effects of U.S. tariffs, the Bank has adjusted its monetary policy to be less focused on long-term predictions. Macklem cautioned that incorrect forecasts could lead to ineffective policies or worsen economic conditions.
“We need to create policies that minimize risks, which means being less forward-looking until the situation is clearer,” Macklem stated at a business event in Calgary. He emphasized the importance of flexibility and adaptability, without providing specific details on future actions.
Macklem also confirmed the Bank’s commitment to controlling inflation and preventing price increases caused by tariffs from spreading across the economy. He noted that the impact of tariffs on demand and consumer prices is still uncertain. If the impact proves inflationary, the Bank will need to focus on maintaining stable inflation expectations.
The Bank of Canada aims to keep inflation at 2%, the midpoint of its 1-3% target range. While inflation has been successfully reduced to this target, Macklem warned that it is expected to rise again. “The Canadian economy managed a soft landing, but a new economic crisis is now emerging,” he said.