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Bank of Canada governor warns of unusual potential for new economic shock due to Trump policy
Bank of Canada governor warns of unusual potential for new economic shock due to Trump policy
By Promit Mukherjee and Maria Cheng
January 29, 2026 6:05 AM EST • Updated January 29, 2026
Bank of Canada Governor Tiff Macklem takes part in a press conference, after cutting key interest rate, in Ottawa, Ontario, Canada September 17, 2025. REUTERS/Blair Gable/File Photo
Summary
• Macklem cites elevated geopolitical risks and US trade policy as potential shocks
• Macklem notes unpredictability of US policy affecting global markets
• US-Mexico-Canada free trade deal review another major source of uncertainty
• Threat to Federal Reserve independence another concern for Canadian economy
OTTAWA, Jan 29 (Reuters) - Bank of Canada Governor Tiff Macklem told Reuters he saw unusual potential for a new shock to the economy, given elevated geopolitical risks and U.S. trade policy.
Macklem said in an interview on Wednesday that more factors than usual could deter Canada from achieving the bank's economic forecasts, citing U.S. President Donald Trump's threats toward Greenland, his removal of Venezuela's leader, and repeated threats to impose more tariffs on Canada.
"There is unusual potential for a new shock, a new disruption," Macklem said. "Geopolitical risks are elevated."
He cited attacks on the U.S. Federal Reserve's independence as another risk this year, and said he spoke to Fed Chair Jerome Powell recently. Trump has demanded publicly that the Fed cut interest rates.
{snip}
By Promit Mukherjee and Maria Cheng
January 29, 2026 6:05 AM EST • Updated January 29, 2026
Bank of Canada Governor Tiff Macklem takes part in a press conference, after cutting key interest rate, in Ottawa, Ontario, Canada September 17, 2025. REUTERS/Blair Gable/File Photo
Summary
• Macklem cites elevated geopolitical risks and US trade policy as potential shocks
• Macklem notes unpredictability of US policy affecting global markets
• US-Mexico-Canada free trade deal review another major source of uncertainty
• Threat to Federal Reserve independence another concern for Canadian economy
OTTAWA, Jan 29 (Reuters) - Bank of Canada Governor Tiff Macklem told Reuters he saw unusual potential for a new shock to the economy, given elevated geopolitical risks and U.S. trade policy.
Macklem said in an interview on Wednesday that more factors than usual could deter Canada from achieving the bank's economic forecasts, citing U.S. President Donald Trump's threats toward Greenland, his removal of Venezuela's leader, and repeated threats to impose more tariffs on Canada.
"There is unusual potential for a new shock, a new disruption," Macklem said. "Geopolitical risks are elevated."
He cited attacks on the U.S. Federal Reserve's independence as another risk this year, and said he spoke to Fed Chair Jerome Powell recently. Trump has demanded publicly that the Fed cut interest rates.
{snip}