Macklem in Halifax: $100 Oil, Fresh Tariffs, and Why a Rate Cut Isn't Coming

Speaking to the Halifax Partnership on September 21, 2026, Bank of Canada Governor Tiff Macklem laid out an uncomfortable picture: energy prices are pushing inflation up while renewed trade tensions are pushing growth down. For households, that combination is more awkward than either problem alone, because the usual relief valve — a rate cut — is no longer the obvious answer.

The four numbers worth remembering

• CPI inflation has been running around 3%, well above the Bank's 2% target, and is expected to edge higher if oil stays near US$100 a barrel.

• Damaged global refining capacity means pump prices are behaving as if oil were roughly US$40 higher than it actually is. Your fuel line is being squeezed by more than the crude price alone.

• If the latest US tariffs stay in place, the Bank thinks fourth-quarter growth could be roughly halved, to below 1%.

• Bond yields are rising at both the short and long end, as governments borrow more and markets price in the possibility of central banks raising rates again.

What it means for your plan

Rising bond yields are the part most households underestimate. Fixed mortgage rates in Canada track bond yields, not the overnight rate, so a renewal coming up in the next twelve months could reprice higher even with the policy rate frozen at 2.25%. Meanwhile the Governor was explicit that the Bank is prepared to move in either direction — it does not want to raise rates if price pressures stay contained, but it does not want to be slow if they broaden.

1. Stop assuming cheaper debt. If your projection still bakes in falling rates through 2027, replace that with a flat-to-higher path and see what breaks.

2. Give fuel and transportation their own line. A gasoline shock does not show up evenly — it hits commuters, tradespeople and rural households far harder than the headline CPI suggests.

3. Treat income as the softer variable. Growth below 1% in a quarter means hiring slows first in trade-exposed sectors. If your household income depends on one of them, model a delayed raise or a gap between jobs.

Run both scenarios, not one

The honest takeaway is that nobody — including the central bank — knows which force wins. That is exactly the situation projections are built for. In AffordaFlow, duplicate your baseline and build two versions: one where inflation stays near 3% and borrowing costs drift up, and one where growth stalls and your income rises more slowly than planned. If both versions still leave you solvent, you have a plan. If only one does, you have a decision to make now rather than in six months. The Bank's next Monetary Policy Report lands in October and will be the first to use its new Prima forecasting model — a good moment to revisit whichever scenario is winning.

Source: Bank of Canada, Navigating uncertainty and adapting to change (remarks by Governor Tiff Macklem, Halifax, September 21, 2026).

This article is informational and not financial advice.