BOC: Gov Macklem Emphasizes Uncertainty Amid Trade War

Gov Macklem is asked at the post-decision press conference what kind of inflationary impact the Bank expects to arise from the US-Canada trade war: 

• "given the pervasive uncertainty and the unpredictability of US trade policy, I can't put a number on it. The scenario is changing every day with new announcements, literally every day...the reality is, some prices are going to go up. We can't change that. What we're particularly focused on is what we don't want to see, is we don't want to see that first round of price increases have knock on effects, causing other prices to go up that becoming generalized and ongoing inflation, that's what we can't let happen."

Asked about the possibility of a future rate hike, Macklem repeats the "uncertainty" theme and the limits of BOC policy to combat both higher inflation and weaker growth:

• "the reality is, there's, there's a lot of uncertainty, and against that background, we can't provide forward guidance....we've been very clear monetary policy cannot offset the impacts of a trade war. We're going to get weaker economic activity. We're going to get higher prices, higher inflation. We can't change that. What we can do is ensure that any rise in inflation is temporary. And what does that mean? What it means is we're going to do as much as we can to help the economy adjust to the painful adjustment to higher us tariffs. But what we can do is limited by the need to control inflation. We can't lean against weaker growth and higher inflation at the same time. "