MNI BRIEF: BOC Sees Offsetting Trade War Inflation Pressures

Bank of Canada Governor Tiff Macklem told lawmakers Thursday while he would be concerned if headline inflation drifted up towards where underlying inflation has been running, companies face upside and downside pressures linked to the U.S. trade war.

Firms are seeing new costs related to supply chain disruptions but a soft economy also makes it tougher to raise prices, Macklem told the Senate banking committee. Inflation has been "tracking pretty closely" to the Bank's 2% target for about a year now even with elevated core indexes, he said. “We don’t see wage pressures as a big cost driver for companies,” he said.

Asked about a U.S. case on the legality of some of President Donald Trump's tariffs, the Governor said: “Regardless of the Supreme Court ruling, I expect we’re going to be dealing with it for some time.” (MNI INTERVIEW: Supply Damage Supports BOC Hold- Dal's McNeil)