Bank of Canada governor takes questions after holding key rate steady

追加: 2026-04-30

[00:00:00]Good morning everyone. I'm very pleased to be here with the senior deputy governor Carolyn Rogers to discuss the monetary policy report and today's decision. Governing council maintained the policy interest rate at 2 and a4%.

[00:00:14]We've held the policy rate at this level since last October.

[00:00:19]We have three key messages today. First, Canada is being buffeted by global events and geopolitical uncertainties, but our economy is growing and we expect it to continue to grow. Second, after more than a year with inflation close to the 2% target, higher global energy prices are pushing inflation up. The surge in gasoline prices combined with still elevated food price inflation is squeezing more Canadians.

[00:00:50]And third, monetary policy is focused on ensuring that the jump in energy prices does not turn into persistent inflation while helping the economy adjust to global headwinds.

[00:01:03]We are committed to keeping inflation low and stable over time.

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[00:01:46]It was your polit Let me expand on the economic outlook, the risks and the implications for monetary policy. Since our previous forecast in January, the war in the Middle East has sent global energy prices sharply higher, increased financial market volatility and disrupted shifting shipping for fertilizer and other commodities.

[00:02:33]This has allowed the out sorry this has lowered the outlook for global growth while boosting inflation. In Canada, growth looks to have resumed after contracting at the end of 2025. Consumer and government spending are contributing to growth, while US tariffs and trade uncertainty are weighing on exports and business investment.

[00:02:55]The labor market is soft with the unemployment rate remaining in the 6 and a half to 7% range, reflecting both weak hiring and fewer job seekers.

[00:03:06]Our forecast for GDP growth in Canada has not changed significantly since our January projection. The conflict in the Middle East will affect the composition of growth, but the impact on overall growth is expected to be small because higher global oil prices will increase the value of our energy exports even as they squeeze consumers and many businesses.

[00:03:30]In our forecast today, the Bank of Canada projects the economy will expand 1.2% in 2026, 1.6 six in 2027 and 1.7% in 2028. As growth in exports and business investment gradually resumes with GDP growth slightly above potential, the current excess supply in the economy is slowly absorbed.

[00:03:56]Until the war, we expected inflation to stay close to the 2% target, but sharply higher gasoline prices are now pushing up inflation. CPI inflation rose from 1.8% in February to 2.4% in March. Core inflation has been easing and held steady just above 2% in March. The proportion of the components of the CPI basket rising faster than 3% has also declined in recent months. So far, there is little evidence that higher oil prices have fed through to other goods and services prices more broadly, but it is early days and we will be watching this closely. We will also be closely monitoring inflation expectations.

[00:04:43]Near-term inflation expectations have moved up with higher gasoline prices and still elevated food price inflation, but longerterm inflation expectations remain anchored.

[00:04:56]Based on recent market expectations, oil prices are assumed to decline from an average of about $90 a barrel in the second quarter to about $75 a barrel by the middle of next year. If that happens, inflation should peak around 3% in April and then ease back to the 2% target by early next year.

[00:05:16]The Bank of Canada is committed to keeping inflation close to the 2% target over time.

[00:05:23]The monetary policy needed to achieve this will depend importantly on what happens with the Canada US Mexico trade agreement, how the conflict in the Middle East evolves, and the impacts of US tariffs and energy prices on our economy.

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[00:07:00]At our meeting this week, we decided to maintain the policy rate at two and a quarter%. Governing council agreed to look through the war's immediate impact on inflation. But if energy prices stay high, we will not let their effects become persistent inflation.

[00:07:17]Our baseline forecast assumes oil prices will come down and US tariffs will remain at current levels. If this holds true, a policy rate close to the current setting looks appropriate to support the adjustment in the economy and return inflation to target. There may there may still be a need to adjust the policy rate depending on how risks evolve. But if the economy evolves broadly in line with the base case, changes in the policy rate can be expected to be small.

[00:07:49]However, uncertainty is unusually elevated and there are many possible outcomes.

[00:07:56]Monetary policy may need to be nimble.

[00:08:00]If the United States imposes significant new trade restrictions on Canada, we may need to cut the policy rate further to support economic growth. Alternatively, if oil prices continue to increase, and particularly if they remain elevated, the risk that higher energy prices become ongoing inflation increases.

[00:08:22]And if this starts to happen, monetary policy will have more work to do. There may be a need for consecutive increases in the policy interest rate.

[00:08:32]Of course, these are not the only possible outcomes. We'll be watching developments closely and assessing their implications for growth and inflation.

[00:08:42]As the outlook evolves, we stand ready to respond as needed. The bank is committed to ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. And with that, the senior deputy governor and I will be very pleased to take your questions.

[00:09:01]>> All right, we'll start with questions here in Ottawa and then go to reporters who are joining us remotely. Uh we kindly ask that you limit yourself to one question so that we can get to every media outlet. Before asking your question, kindly state your name and affiliation.

[00:09:18]Uh so we'll start with Reuters followed by the logic then the Globe and Mail. So go ahead prom.

[00:09:25]Thanks, Becca. Um, good morning, Governor. Uh, with inflation in April expected to reach 3%, what is your message to households and businesses, uh, who might start demanding higher wages and the broader inflation expectations might also go up?

[00:09:44]>> Well, first of all, I mean, we know higher oil prices are hitting Canadians. uh they're hitting businesses, they're hitting consumers. We've all gone to the gas station and filled up our tank. Uh that's against a background where food price inflation has has been running uh high for a number of months now.

[00:10:10]These price increases reflect global events. I mean, the best thing that would be could be to happen would be would be that these price increases go away at the source, but that's not something we can control. What can we control? What we can control is we can ensure that these price increases in in particularly this surge in u gasoline prices uh and other fuel prices it doesn't spread become generalized persistent inflation.

[00:10:40]Maintaining the policy rate today uh where it is was the right thing to do for today. Um and you know as we've indicated if things evolve broadly in line with the outlook we've we've uh presented and and in particular oil prices come down broadly in line with the futures curve. Um you know something close to the policy rate that we have today is probably about right. Might need a small adjustment but I think it' be reasonable to expect small. But I if if particularly if energy prices um go higher and and particularly if they stay higher for longer uh there could well be a need to increase the policy rate to get inflation back to 2%. And and really the message is um you know we're we're committed to ensuring that inflation does stay close to 2% over time.

[00:11:36]>> Go ahead Kevin. Uh good morning Kevin Carmichael from the logic. Uh you had a look at um how AI might be affecting productivity and updating potential output.

[00:11:47]Is that yet factoring into uh policym here in in the present? Um maybe just talk a bit about how you're thinking about AI as you sit down to uh to look at rate trajectory.

[00:12:00]>> Um well let me let me put it in broader context Kevin. Um there there's a few things affecting potential output and once a year as you know we do a comprehensive review of our of our assessment of potential output and the outlook for potential going forward and that is you know we do that uh each each year at the in the April monetary policy report. So there is a a pretty detailed appendix on that in the report. Um look there there are I would say three key things affecting potential in the outlook. uh population growth is historically very low. There's basically in our outlook there's almost no population growth. So that means that you know we're not adding new workers, new consumers, uh a lot of new workers, new consumers to the economy. So that lowers potential output going forward.

[00:12:51]The second factor is uh and we've talked about this quite extensively in in the last report and in some previous speeches. The Canadian economy is going through a structural adjustment. Uh our trade relationship with the United States is fundamentally changed.

[00:13:07]Businesses are adjusting to that and as you know through that adjustment that will weigh on productivity growth. once you come out the other side uh things will be better but there is a period of adjustment and then the third so so those two things are weighing on potential output growth um particularly in the near term the third factor which what you mentioned is is AI and and there's no doubt that AI is a transformative technology and as it as it um gets adopted by more and more businesses and as they and and as the as they use it uh in their businesses. We do expect to see labor productivity growth pick up and so that we have built in a modest u increase from AI uh in productivity growth going forward.

[00:14:00]It builds over time. I think it on average it's adding about 0.2 to productivity growth uh in the projection. So taking those three things together uh potential output growth is fairly weak in the near term. Um but as the restructuring advances and as the effects of AI accumulate, productivity growth picks up going forward. So that's built into our projection. Um you know, is AI having a big effect on our policy decision right now? No. But it is built into our projection. And um you know, it could end up that uh AI comes faster, has a bigger effect than we've expected.

[00:14:39]It might take longer. We'll see. That's something we'll be assessing going forward.

[00:14:45]>> Go ahead, Mark.

[00:14:47]>> Thanks for taking the question, Governor. Um, so you spell out two kind of major risks. One is oil prices remain elevated and you're forced to raise interest rates. The other is uh the koozma talks take a turn for the worse and you are forced to cut. Those aren't mutually exclusive risks. What happens if we end up in a scenario where uh tariffs have risen, koosma talks have floundered and oil prices remain high?

[00:15:11]How do you balance those risks?

[00:15:13]Um look you know I you yes you know I provided a couple of examples and I think you know the reason I provided those two examples is you know those are are very salient assumptions in our projection around which frankly there is a lot of uncertainty and there and it's not the regular kind of kind of you know regular economic uncertainty. These are these are geopolitical events. Um so it's hard to assess uh probabilities as to as to exactly what's going to happen.

[00:15:47]Um and yes as you know as we outlined um you know the message really is that look today the best decision is to maintain but monetary policy the situation could change. monetary policy um may need to be nimble and um yeah I you know we provided a couple of examples if if uh there's significant new trade restrictions on Canada uh that could have a material impact on the Canadian economy we may need to cut to to support growth if oil prices go up and particularly if they stay up um the risk that inflation becomes more persistent goes up and there may need to uh increases in the policy rate and as we indicated um you know probably more than one consecutive increases. Um those are not the only things that could happen. Um you know to give you another example I mean financial markets uh have been very resilient through this. Uh we could see an abrupt repricing in financial markets. uh that would be you know another shock kind of shock that we would need to take into account and as you indicated uh the reality is more than one thing there's many combinations of these things that could happen um in in laying out those two examples and in particular in showing the alternative case in in the in the MPR with a permanently higher oil price what we're trying to convey is you know sort of the direction and the rough magnitude of how we would respond given certain situations.

[00:17:33]Obviously, if it's a combination, it's going to be even more complicated. Uh and we'll have to we'll have to weigh various factors. Um you know, the the point of of of sort of laying out these alternatives is really to give a sense of yeah, how we would likely react in in certain situations.

[00:17:54]All right, next on my list, I have the Canadian Press, followed by CTV, then Market News. So, go ahead, Craig.

[00:18:02]Uh, thank you, Craig Lord with the Canadian Press. Uh, Mark stole my question. Um, I can figure out another one. um with the uh the suggestion that you are prepared to potentially take a a cons consecutive increases to the policy rate if we see elevated and sustained global oil prices. What is the time frame that Canadians should be expecting you to be looking at these these global oil prices? If we are at the end of the summer and we haven't seen much change in the global price of oil, should Canadians then be expecting uh interest rate hikes coming down the pipeline?

[00:18:45]Uh look, obviously, you know, the higher oil prices go and the longer they're higher, the the more, you know, the more likely it is that we'll have to raise rates to to uh bring inflation back to target. But I I want to stress it's it's you know there is no set timeline here. It really depends on the conditions. Uh it's going to depend importantly on yes what oil prices do.

[00:19:16]Uh what we think they're going to do going forward. It's all going to depend on what we see. You know how much are higher oil prices spilling into the prices of other goods and services? How much is our outlook for inflation changing? I mean, is is that substantially increasing the persistence of inflation? So, it's going to depend on on those conditions. So, I mean, what I would stress is it's it's about the shock itself and it's about the propagation of of the shock. And um you know if if we're in a situation where the shock's bigger and in particular it's more persistent and we see clear ev we we see growing evidence of propagation uh that would be a clear signal that um yes rates probably do need to go higher uh to get inflation back to target.

[00:20:13]>> Uh sorry go ahead Paul.

[00:20:20]Oh, sorry, sorry, Annie. Sorry.

[00:20:23]Uh, sort of a similar question to one of my colleagues, but you're talking about the potential impact of US tariffs, but also of higher oil prices, and the monetary policy report does outline what the situation could look like if oil remains at $100 a barrel. I'm wondering what does the bank see as more of a pressing threat to the economy? Is it US trade policy, potential US tariffs being added, or oil prices being elevated and remaining closer to that $100 a barrel that you talk about in the monetary policy report?

[00:20:52]I think it'd come back to thinking about it in terms of time. So, in the near term, the the shock that's sort of hitting us most directly is is the is the war in the Middle East. It's pushing oil up and that's having an immediate impact on on near-term inflation. And as the governor said, if that persists, that's that's going to uh uh that the risk increases that that uh oil price starts to feed into the price of other things and and we need to deal with the inflation shock over the longer term. Um the the trade tensions are the bigger threat to the Canadian economy. Um and and there, you know, we've we've got a restructuring underway, but we also have a review of the trade agreement that we're expecting to to happen this summer. If there is a big change in that agreement, um that could also present sort of a new shock to the economy, too.

[00:21:44]So, sort of think about it in terms of two time frames.

[00:21:49]>> Go ahead, Greg.

[00:21:51]>> Greg Coin, Market News. Um, I wondered if if having the policy right now at the lower end of the so-called neutral range uh makes you a little more nervous about the potential need to tighten and is is this in another way why you're talking about a potential set of consecutive hikes?

[00:22:09]>> Uh well, look, I I would emphasize that there was a clear consensus on the governing council that the best thing to do today is maintain the policy interest rate where it is. But I will stress that there is no risk-free path for the policy interest rate. Uh you know if we had raised rates now um and then oil prices come down in line with what the market's expecting by the time those higher interest rates are impacting the economy uh we wouldn't they wouldn't be needed and we'd wished we hadn't raised the policy interest rate. But look, if oil prices uh stay high and we hold rates we maintain for too long, uh yeah, we could see higher energy prices spread to other prices of other goods and services and start to become more persistent inflation. Uh and yeah, in that case, we will probably wish that we'd raised rates earlier. So we got to manage we've got to manage both those risks, Greg. And and as I said, I think you know there was a clear consensus that right now the best thing to do is maintain but but let me add two additional points of context. First of all, the current context is we're starting from a situation where inflation has been close to target for uh roughly a year and a half now. Uh we're also starting in an economy where there's some slack. Uh you can see it in the labor market. uh our estimate of the output gap is it's you know it's around minus 1%. So we're starting with some slack. So in in that context we you know we don't think higher energy prices are going to be rapidly passed through to the prices of other goods and services because when there's some slack in the economy when the econom labor market is soft um you know businesses are they're cautious about passing on price increases. They're worried about losing clients. Uh so we don't expect it'll it'll be rapid. I think you're you're clearly going to see it in some places.

[00:24:16]You're already seeing fuel search charges in some places. Um but we're not expecting it to rapidly broaden, but you know that's something that needs close monitoring. The other thing I would stress is that you know we we know uncertaintyy's high and we recognize that monetary policy may need to be nimble. uh if the situation changes uh we need we need we may need to change course uh and you know as I've said a couple of times if if oil prices go higher and particularly if they stay higher for longer that will increase the risk that um inflation generalizes uh and becomes more persistent and in that case yes uh we may well need consecutive increases in the policy rate to get inflation uh back to the 2% target.

[00:25:09]>> All right. Uh the next question will be from Bloomberg followed by the Wall Street Journal. Uh and then Global News.

[00:25:14]So go ahead, Njude.

[00:25:16]>> Good morning, Governor. Um Kora is still stuck um higher than the bank's target.

[00:25:21]You've given no indication you plan to fix any dislocation issues there. Is that still the case?

[00:25:27]>> Sir, can you just say the last part again?

[00:25:29]>> Core is above the target.

[00:25:31]>> Yes. You've given no indication that you plan to fix any dislocation there. I'm just wondering if that's still the case.

[00:25:38]>> Well, I mean on core I mean just to take you back a bit as you'll remember um you know total CPI inflation came down.

[00:25:48]>> I'm asking Kora.

[00:25:49]>> Yeah, I know. I'm getting to >> our target is total Majoot.

[00:25:54]>> Don't forget >> Oh, Kora. Yeah.

[00:25:56]>> Oh, sorry. Sorry.

[00:25:58]>> So, >> okay. Um Kora, so you were talking about the the fact that from time to time we need we need to uh >> do overnight operations.

[00:26:06]>> Yeah. I mean we've got a little bit of a margin but you know we have some tolerance there. So so I mean you've called it a dislocation. I guess that's maybe stronger term than what we would use. So so uh I mean our market operations are are basically back to sort of normal course. Our balance sheets back to being normalized. So, uh, we keep an eye on Kora, but I guess we wouldn't characterize it as a dislocation.

[00:26:34]>> Sorry about that. Core Kora, you know.

[00:26:40]>> Okay, Paul. Uh, Governor, I wanted to maybe go back to previous questions, but what what I want to know is what motivated you and the governing council to provide this form of forward guidance today about, you know, when right when rates may may increase or when rates may decrease.

[00:27:04]Uh well, Paul, I I I wouldn't really characterize this so much as forward guidance and and it's not about when something's going to happen. It's about the it's really more about our reaction function. It's about what you know the governing council is very aware that there are a wide range of outcomes that are possible. And as part of our deliberations, we not only discussed what the best thing to do today is, but we also discussed uh what would we do uh in if if some of these other uh outcomes were to materialize. Um because you got to recognize that uh you know when you're taking there there's a lot of uncertainty and yes you know we have a baseline outl outcome but we're the first ones to admit that is not the only possible thing that could happen and there is an unusually wide range of things that could happen. So as you discuss about what the best thing to do today is you need to also be thinking about what you know how well positioned are you to deal with these other things.

[00:28:13]So that's why we discussed those and having discussed those um you know I think it is useful to convey uh certainly directionally how we would handle um these various outcomes. I think we're not the only ones grappling with this uncertainty. Everybody's trying to grapple with uncertainty. Our job is to be a source of stability, a source of predictability. Uh so we're you know we're what we're saying is that you know we're prepared to respond as needed and you know we're giving some some uh broad strokes as to what that could look like.

[00:28:57]>> All right Mac >> U Mackenzie Gray with Global News. Um talk about consecutive rate cuts probably gives you and I'm sure some Canadians who might be watching some nasty flashbacks to where we were with co What lessons have you learned from that spike and what do you plan to do differently this time to avoid a similar inflation runup?

[00:29:16]>> Well, may maybe we could both take that one since there I think there's there's more than one lesson from CO. Um, look, I I think one of the key lessons from COVID is, you know, as we were coming out of COVID, um, there was certainly a combination of shocks, very disrupted global supply chains that persisted for some time. Obviously, Russia's unprovoked attack of Ukraine really boosted food and energy prices and the impact on inflation was large and it was rapid. And I think one of the lessons from COVID is that when the economy is already overheated, when it's already in excess demand, uh an an additional, you know, a big negative supply shock that boosts global uh energy and food prices uh can spread quickly to other goods and services. And it gets back a bit to my answer to Greg.

[00:30:19]Um you know, it's the flip side of it.

[00:30:20]When the economy is already in excess demand, companies are having trouble actually keeping up with all the demand for their goods and services. So, when their costs go up, they're like, "Well, we might as well just pass this right on. We're having trouble keeping up already. Uh, let's just pass these price increases on." And that's what we saw in co, you know, not only were companies increasing prices by more, they were increasing prices more frequently. Uh and to be frank, as a result, our models were having trouble keeping up with how fast inflation was going up. Um today's situation is is quite different.

[00:30:59]The economy is in excess supply. Uh and as I said to Greg, you know, against that background, um businesses are are a bit more co are more cautious about passing on um cost increases. Doesn't mean they won't pass them on at all. Um and certainly in businesses that where energy is a big part of the the cost structure, they have to pass some of it on, but um you know they will tend to be more cautious. I don't know if you want to supplement that. Well, Mark stole your question and governor stole my answer, but maybe what I'd add is uh I mean, you're right when you know, we were always uh our current things thinking is always affected by what happened in the past and it is true. You know, big consecutive increases in the interest rate. Um we know that's a a pressure on Canadians. But what we also learned really clearly is they don't like inflation either. Canadians don't like inflation either. So, so I mean we would raise interest rates with the sole purpose of making sure we keep inflation at target. So, yeah.

[00:32:06]All right, we'll go to the call now. I just want to remind people on the call to mute their line if they're not asking a question. Uh, so we'll go to Rob McListister.

[00:32:17]>> Good morning, Rob McListister from mortgage logic.news. uh you've mentioned it's especially vital to watch medium and longerterm inflation expectations.

[00:32:26]So many Canadians are wondering what deanchored expectations look like. Uh so in the latest business outlook survey uh showed medium-term or two-year expectations at 3.4% rising 60 basis points in a month. If the next 2-year expectations reading gets closer to 4%.

[00:32:46]Would you still consider that to be anchored inflation expectations?

[00:32:53]>> I think maybe what I would say uh Rob is when when we look at inflation expectations, I mean what we know about consumer inflation expectations um it's it's a bit different than business expectations. They're very affected by the current perception of inflation. Um, and current u perception of inflation is really um very affected by the things you buy most often. Every day groceries and gas and we know that that the shocks we're seeing right now are pushing gas up and and groceries food inflation has been a bit higher than headline inflation. So, so we keep that in mind when we look at how consumers view um uh inflation expectations.

[00:33:41]Um more in general, what I would say is is you need to be careful um to look for trends versus month overmonth impacts on in on inflation expectations. So, you know, we keep a very close eye. We look a little bit differently at at how businesses see um inflation expectations versus consumers, but what we're really looking for is an overall trend line. Is there a break point? I mean, what you're asking for is there a number at which we completely change our view? No. Um uh we combine uh what we're seeing in that data with other things and and other feedback we're getting and outreach and stuff. So there there isn't sort of a um a number at which we we turn from one view to another.

[00:34:24]I I just add Rob just to broaden this a little bit. Um I think one thing we're we're conscious of is that you know coming out of COVID inflation rose rapidly to just over 8%. And for many Canadians this was really the first material inflation they had experienced in their lifetime. Uh and unfortunately a whole new generation of Canadians learned just how painful inflation is.

[00:34:53]And against that background, um, you Canadians may be more attentive, may be more aware of the risks of inflation.

[00:35:01]Uh, and as Carolyn just mentioned, particularly when it's in food and and gasoline, things people tend to buy every week, uh, it it can have a very immediate effect on on their uh, inflation expectations. So you know there is a risk that inflation expectations aren't as well anchored as they were uh you know before co um on the other hand um you know we demonstrated infl Yes inflation went up just over 8% we also brought it back down to 2% relatively quickly uh I I won't say it was without pain it certainly uh was not easy for many Canadians but we didn't cause a recession we got it back without a recession Uh and you know what we saw in our own um you know public trust you know surveys of public trust in the bank of Canada yeah when inflation went up to 8% Canadians were quite rightly asking a lot of questions uh public trust in the bank of Canada went down but when inflation came back down and has remained at 2% that public trust has come back down so it you know on that basis it doesn't look like the credibility of the central bank uh and our resolve to to keep inflation close to you know Canadians confidence in in price stability has been eroded. So um you know these are more psychological factors but as as we assess what's happening with inflation expectations we we are alive that you know we are cognizant of the fact that um how people form their expectations may may evolve over time and that's something we're certainly uh watching closely.

[00:36:39]All right. Uh, that was the last question and so that will conclude today's press conference. Thank you to the governor, senior deputy governor for taking the questions and to all of you for joining us. Melie, >> thank you.