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Bank of Canada (BoC) Governor Tiff Macklem cautioned on Thursday that policy uncertainty in the United States, particularly President Donald Trump’s tariff threats, is already weighing on business and consumer confidence, especially in Canada and Mexico. His remarks, reported by Reuters, highlight growing concerns over the economic impact of potential trade disruptions.
Key Takeaways from Macklem’s Statement
- Trump’s tariff threats are already affecting business and household confidence, particularly in Canada and Mexico.
- Prolonged uncertainty could further dampen economic activity in North America.
- Structural changes and supply shocks will make policy decisions more challenging for central banks.
- Central banks may face criticism and threats to their independence as they navigate these economic challenges.
Market Reaction
Despite Macklem’s warning, the USD/CAD exchange rate remained steady at 1.4305 at the time of writing, showing little immediate market response. However, continued uncertainty surrounding U.S. trade policies could drive further volatility in the currency markets.
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