Tiff Macklem wears a pin of the Edmonton Oilers while he is thinking about the end of big chances.
It is an important day for the governor of Bank of Canada: He has just presented his reasons to the whole country and a global audience to have standard the reference rate of the central bank for a second consecutive time.
This night is also match 1 of the Stanley Cup final of the NHL; Macklem ends his press conference with a hearty “Go Oilers!”
It is a revenge match of the sorrow of last year, when the oilers came so many couple to put on an apparently impossible return of four games against the Florida panthers, so as not to fail by a single goal in match 7.
Macklem, too, was almost safe to declare the victory last year.
He had roughly obtained a “gentle landing” coveted for the economy of Canada – a rare feat which sees a restrictive monetary policy bringing down the levels of inflation without changing the economy in a prolonged slowdown.
“We obtained inflation. We did not provoke a recession,” said Macklem in an interview with the Canadian press after the rate announcement on Wednesday.
“And, to be frank, until the president (Donald) Trump begins to threaten the economy with new prices, we really saw the growth come together.”
Freshly out of a crisis, the central bank must now face another in American prices.
Five years after his mandate at the head of the Bank of Canada, Macklem said that he saw the role of the central bank in the mention of the economy – as well as the role of Canada on the world scene.
Many Canadians have familiarized themselves with the Banque du Canada in recent years. After the Pandemic Recovery COVID-19 sparked inflation, the central bank’s rapid tightening cycle and subsequent rate drops were high-level news for anxious Canadians highlighted by prices increase and borrowing costs.
Everything was looking for the Central Bank’s inflation objective by 2%, part of a mandate from the federal government which is expected to examine next year.
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Macklem has said that in recent years have led the Bank of Canada to examine some of its measures, such as basic inflation and the way it reacts to economy shocks.
But he defends the maintenance of the bank’s inflation objective, especially at a time of world upheavals.
“Our flexible inflation targeting framework has just passed the greatest test he has ever passed in the 30 years since we announced the objective of inflation,” he said.
“I’m not going to claim that it was a few easy years for anyone. But I think the framework worked well. ”
Macklem said, however, that he saw room to develop the mandate to respond to other areas of concern for Canadians, such as the affordability of housing.
Whether it is the high cost of the rent or a mortgage, or the increase in prices of grocery store and vehicles, Macklem has said that the last years have been revealed by Canadians who were not around the last time that inflation affected two figures in the 1980s.
“Unfortunately, a whole new generation of Canadians now know what inflation looks like, and they didn’t like it at all,” he said.
Monetary policy itself cannot make houses more affordable, he noted-in a word, high interest rates make mortgages more expensive while low rates can increase the price of housing itself because they attract demand.
But Macklem said that one of the things he thinks is that inflation can get worse when the economy does not work with its potential or when it is faced with a large disturbance.
“There is a role for monetary policy to smooth part of this adjustment – supports the economy while ensuring that inflation is well controlled.”
He did not propose any suggestions on how the mandate could extend to combat the affordability of housing specifically, but said that “work is underway” and will be resolved during meetings with the federal government next year.
Currently, he is trying to ensure that the economic impacts of Canada’s tariff dispute with the United States do not lead to prolonged inflation.
The Bank of Canada is not the only one to debate the way monetary policy should react in what Macklem has described a more “subject to shock” world.
The G7 finance ministers in Kananaskis, Alberta last month also presented round tables with the central bankers of the block.
Conversations at the top were “frank”, said Macklem, and although the nations have published a joint declaration at the end of the event, that does not mean that they agreed.
“International cooperation, to be honest, has never been easy. It is particularly difficult at the moment, but that is not less important. This makes it more important,” he said.
“I think Canada, as president of the G7, has a leadership role to play.”
The Bank of Canada also changes how it has conversations with Canadians and the type of data it considers.
One day after the June interest rate decision, vice-government Sharon Kozicki told a Toronto commercial crowd how the central bank uses more agile data, based strongly on more granular surveys and information to make monetary policy decisions at an uncertain time. These sources offer a faster way to see what is happening in the field in the economy that traditional statistical models allow.
Macklem said the central bank would have previously rejected most tenders to be transitional – likely to pass without the need for central bank adjustments, such as the rise and drop in oil prices.
But he said that the Bank of Canada must now manage a “more nuanced game book” to respond to certain increasingly common shocks: disturbances of the supply chain, commercial conflicts and extreme time to name just a few.
An overheated economy against a disruption of the offer is the type of inflationary fire that Macklem is trying to avoid in this last crisis.
“The economy does not work well when inflation is high,” he said.
“And the main role of the Banque du Canada is to ensure that Canadians maintain confidence in price stability. That’s all we can do for the Canadian economy. This is what we can do for Canadians. And that’s what we focused on. “
Later in the day on Wednesday, EDMONTON’s Oilers won match 1 of the Stanley Cup final. The Canadian team was down but Rugi to gain 4-3 in overtime.
It is still at the start of the Bank of Canada’s Bank’s response to the last world shock. But with a little luck, the Macklem team could also get a step ahead with the lessons learned the last time they have faced a big chance.