BoC's Macklem: Below-forecast growth could keep inflation low

Bank of Canada (BoC) Governor Tiff Macklem spoke at the Vancouver Board of Trade on Monday, spinning an expected drag on Canadian economic growth as a positive on the hopes that lagging growth at the nation-wide level could, in theory, limit a reignition in inflationary pressures.

Key highlights

Big structural changes are already underway, such as deglobalization, demographic shifts, digitalization, and decarbonization.

In the future, the world is set to be more prone to shocks than we would all like.

There are risks around our inflation outlook; we are equally concerned with inflation coming in higher or lower than expected.

The combination of higher sovereign debt, higher long-term interest rates, and lower economic growth is making the world more vulnerable.

We also need to improve our analysis and ensure our monetary policy framework is fit for purpose.

The economy could continue to grow below its potential which would pull inflation down.

Elevated wage increases combined with weak productivity could boost inflation as businesses look to pass on higher costs.