Bank of Canada Governor Tiff Macklem Calls for Evolving Mandate Amid Increasingly Shock-Prone Global Economy

Tiff Macklem, governor of the Bank of Canada, donned an Edmonton Oilers pin with a sense of optimism—both for his favorite hockey team’s prospects and for the Canadian economy. On a day when he defended the central bank's decision to maintain its benchmark interest rate for a second consecutive period, all eyes were not only on Game 1 of the Stanley Cup finals but also on the economic outlook for Canadians facing persistent uncertainties.

Macklem concluded his remarks with a spirited “Go Oilers!”—a nod to the team’s quest for redemption after last year’s dramatic but ultimately unsuccessful comeback in the finals. That near miss on the ice mirrored the central bank’s own efforts: last year, Macklem’s policies came close to achieving the coveted “soft landing,” successfully reducing inflation without pushing the economy into recession. “We got inflation down. We didn’t cause a recession,” Macklem reflected, though he noted that progress was disrupted by new threats of U.S. tariffs.

Now navigating the fallout from renewed trade tensions, Macklem sees the Bank of Canada’s role evolving—as does Canada’s stature on the global economic stage. Canadians have grown increasingly familiar with the central bank’s actions thanks to recent inflationary surges, quickly rising interest rates, and subsequent cuts—all in pursuit of the bank’s two percent inflation target. With this mandate up for review next year, Macklem emphasized that the challenges of recent years have prompted a reexamination of how the bank measures and responds to economic shocks, especially supply-related ones.

Despite the scrutiny, Macklem staunchly defended the core inflation targeting framework. “Our flexible inflation targeting framework has just been through the biggest test it’s ever had in the 30 years since we announced the inflation target,” he said. He acknowledged, though, that the experience has opened his—and the public’s—eyes to other major concerns, such as housing affordability. Recent years, with soaring prices for homes, groceries, and cars, have made the sting of inflation palpable for a generation that had never seen double-digit price growth.

While monetary policy alone cannot solve the housing crisis—since high rates boost mortgage costs and low rates stoke demand—Macklem said it is critical to understand how inflation can worsen if the economy faces disruptions or operates below its potential. “There is a role for monetary policy to smooth out some of that adjustment—support the economy while ensuring that inflation is well-controlled.” Although he offered no specifics on expanding the bank’s mandate to address housing directly, he reiterated that “the work is ongoing” and would be under discussion with federal officials in the near future.

Amid these domestic challenges, Macklem is also focused on external shocks, especially the potential impact of U.S. tariffs, aiming to prevent them from causing prolonged inflationary pressures. He noted that the Bank of Canada is not alone in confronting a more “shock-prone” world; recent G7 meetings have featured candid discussions among leaders about the best path forward. “International co-operation, to be honest, has never been easy. It is particularly difficult right now, but that doesn’t make it less important. That makes it more important,” he observed. As Canada chairs the G7, Macklem sees a leadership role for the country on the global economic stage.

The central bank is also adapting its methods for understanding the economy in real time. Deputy Governor Sharon Kozicki highlighted the bank’s increased reliance on surveys and granular data, allowing for quicker assessments than traditional models permit. Macklem admitted that, in the past, the bank might have dismissed most supply shocks as transitory, but now recognizes the need for a more nuanced approach in the face of repeated disruptions—from trade disputes to extreme weather events.

Ultimately, Macklem stressed that the Bank of Canada's main responsibility is to secure trust in stable prices. “The economy does not work well when inflation is high,” he stated plainly. “And the primary role of the Bank of Canada is to ensure that Canadians maintain confidence in price stability. That’s all we can do for the Canadian economy. That’s what we can do for Canadians. And that’s what we’re focused on.”

Later that evening, the Edmonton Oilers staged a thrilling comeback victory in the opening game of the Stanley Cup finals. For Macklem, whose career has been defined by facing down big odds, the parallel could hardly be clearer. The real test for both his team and the Bank of Canada, however, may still lie ahead—with lessons learned from past crises shaping their responses to whatever comes next.