Bank of Canada Governor Tiff Macklem has warned about the potential for economic shocks to rattle Canada over the coming year.
Macklem issued the warning as he spoke to reporters after Canada’s central bank elected to hold its trendsetting overnight interest rate at its current level of 2.25%.
The Bank of Canada governor said that elevated geopolitical risks and U.S. trade policy make the potential for an economic shock unusually high.
“There is unusual potential for a new shock, a new disruption,” Macklem said. “Geopolitical risks are elevated.”
He referred to U.S. President Donald Trump’s threats toward Greenland, his removal of Venezuela’s leader, and repeated threats to raise tariffs on Canadian goods and services.
Macklem also highlighted Trump’s attacks on the U.S. Federal Reserve’s independence as another risk that could roil financial markets and impact Canada.
The comments from the governor come as Canada’s central bank issued new projections for the economy and inflation in its monetary policy report.
The Bank of Canada is forecasting modest growth in 2026 and 2027 with heightened risks to the latest projections.
The central bank said that it expects Canada’s economy to grow 1.1% in 2026 and 1.5% in 2027 as businesses adjust to U.S. tariffs.
However, Macklem said, “We are feeling like there are more things that can go wrong around that forecast. That forecast is more vulnerable.”
Futures markets are pricing in no interest rate cuts from the Bank of Canada this year. The central bank is next scheduled to decide on interest rates March 18.
