The Bank of Canada prepares for an uncertain future

(Vancouver) The Bank of Canada is preparing for a future that seems more uncertain and more prone to crises, says its governor, Tiff Macklem.

In a speech to the Greater Vancouver Chamber of Commerce on Monday, he said structural changes are underway around the world, including demographic and technological upheaval, the shift to a low-carbon economy and a shift away from globalization.

“Our experience of the pandemic must help us prepare for future crises,” Mr. Macklem emphasized in his speech.

To this end, Mr. Macklem indicated that the Bank of Canada is working to learn every lesson it can from how the economy has responded to the pandemic and its consequences.

The Bank of Canada is currently conducting a review of the steps it has taken to restore financial stability and support the economy during the pandemic, which it plans to release alongside an expert panel’s assessment independent.

Mr. Macklem said the acceleration in inflation in 2022 was a reminder that even though inflation was relatively low and stable during the 30 years before the pandemic, central banks cannot take public confidence for granted.

“For some, it quickly became difficult to make ends meet. And even though inflation is low again, many prices remain much higher than before the pandemic. People feel cheated, and their confidence in the economic system is undermined,” he added.

The Bank of Canada cut its key rate for the fifth consecutive time last week, this time by half a percentage point, to 3.25%.

Mr. Macklem said the institution would assess the need for further reductions in the key rate, one decision at a time, and anticipates a more gradual approach to monetary policy if the economy develops as expected.

Statistics Canada reported last month that annual inflation was 2 per cent in Ontario, meeting the Bank of Canada’s target.

Mr Macklem’s speech came ahead of the release of the November inflation report, which will take place on Tuesday.

Before his speech, the governor also thanked federal Finance Minister Chrystia Freeland, who announced her resignation Monday morning, for her work. Mr. Macklem reiterated that the Bank of Canada operates independently and that he will not comment.