BoC's Macklem: Trade disruptions may increase variability of inflation

Eren Sengezer FXStreet

Bank of Canada (BoC) Governor Tiff Macklem said on Tuesday that trade disruptions may mean larger deviations in inflation from the BoC's 2% target, per Reuters.

Key takeaways

"We have to focus on risk management, balancing upside risks to inflation with downside risks to economic growth."

"Trade disruptions may also increase the variability of inflation."

"Cost of global goods may not fall as fast as globalization, and that could put more upward pressure on inflation."

"Pandemic showed that when an economy is already overheated, supply disruptions can have an outsized effect on inflation."

"The growth we are seeing in trade is shifting from goods to services; pandemic may have provided a more durable boost to trade in services."

"Global trade has slowed and that is a big concern for Canada."

"Security risks are real and need to be addressed, but it is important they not become a pretext for inefficient protectionism."

"Seemingly vast potential of digitalization suggests future growth in trade will tilt to services."

"Canada needs to build better trade relationships and produce the products people want to buy."

Market reaction

These comments failed to trigger a noticeable reaction in USD/CAD. At the time of press, the pair was up 0.1% on the day at 1.3575.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD gains traction to near 1.1800 as tariff uncertainty weighs on US Dollar

The EUR/USD pair holds positive ground around 1.1795 during the early Asian session on Tuesday. The US Dollar weakens against the Euro amid US tariff uncertainty. The release of the US January Producer Price Index report will be in the spotlight later on Friday.

GBP/USD treads water near 1.3500 as BoE-Fed divergence debate stalls

GBP/USD spent Monday spinning in place as market participants await a fresh catalyst to break the pair out of its recent range. The BoE's February hold came with a surprisingly dovish 5-4 split, and UK Consumer Price Index data last week showed inflation easing to 3.0%, reinforcing the case for earlier rate cuts, with most economists now looking to April or March for the next move.

Gold down but not out as key $5,140 support holds

Gold consolidates the advance to monthly top of $5,250 in Tuesday’s Asian trades. The US Dollar finds demand as liquidity returns and risk sentiment recovers, despite US tariffs uncertainty. Gold defends 61.8% Fibo resistance at $5,142 amid the pullback, daily RSI remains bullish.

Top Crypto Losers: BCH, HYPE, PUMP extend losses as Bitcoin drops below $64,000

Altcoins, including Bitcoin Cash, Hyperliquid, and Pump.fun, are leading losses over the last 24 hours as Bitcoin falls below $64,000 on Tuesday. The technical outlook for BCH, HYPE, and PUMP flags downside risk amid broader market selling.

Supreme Court nixes tariffs, Trump teases 15% global tariff

On February 20th, the Supreme Court ruled that Trump’s global tariffs under IEEPA authority were unconstitutional, effectively nullifying the framework. However, the relief was short-lived. Within hours, Trump floated a 15% blanket tariff under an alternative legal authority.

XRP recovers slightly as bearish sentiment dominates crypto market

Ripple is rising above $1.40 at the time of writing on Monday amid fresh tariff-triggered headwinds in the broader cryptocurrency market. The sell-off to $1.33, the token’s intraday low, can be attributed to macroeconomic uncertainty, geopolitical tensions and risk-averse sentiment among other factors.