OTTAWA — Tiff Macklem, the governor of the Bank of Canada, is advocating for an evolution in the central bank's mandate as it faces new economic challenges. On a day marked by the NHL's Stanley Cup finals, Macklem announced the decision to keep the benchmark interest rate steady for the second consecutive time. He expressed his support for the Edmonton Oilers, who were playing in Game 1 of the finals, saying, "Go Oilers!"

Macklem's remarks come after a year of significant economic turbulence. He noted that the Bank of Canada had nearly achieved a "soft landing" for the economy, a term used to describe a scenario where inflation is reduced without triggering a recession. "We got inflation down. We didn’t cause a recession," he stated in an interview following the rate announcement. He added that prior to the recent U.S. tariffs, the Canadian economy was showing signs of growth.

As he reflects on his five years in office, Macklem sees the central bank's role adapting to a changing global landscape. The COVID-19 pandemic recovery has made many Canadians more aware of the Bank of Canada’s actions, particularly as inflation surged and the bank implemented rapid interest rate changes. The central bank's inflation target of two percent, part of a federal mandate up for review next year, remains a focal point for Macklem.

Macklem emphasized the importance of the bank's flexible inflation targeting framework, stating, "Our flexible inflation targeting framework has just been through the biggest test it’s ever had in the 30 years since we announced the inflation target." He acknowledged the challenges faced in recent years but expressed confidence in the framework's performance.

However, he also recognized the need to expand the mandate to address pressing issues like housing affordability. Many Canadians are grappling with high rents, mortgage costs, and rising prices for essential goods. "Unfortunately, a whole new generation of Canadians now know what inflation feels like, and they didn’t like it one bit," Macklem remarked.

While he noted that monetary policy alone cannot solve housing affordability, he indicated that the bank could play a role in stabilizing the economy during disruptions. "There is a role for monetary policy to smooth out some of that adjustment — support the economy while ensuring that inflation is well-controlled," he said.

Macklem did not provide specific suggestions on how the mandate might evolve to tackle housing issues but mentioned that discussions with the federal government are ongoing. He is currently focused on mitigating the economic impacts of the tariff dispute with the United States to prevent prolonged inflation.

The Bank of Canada is not alone in its deliberations. At the recent G7 Finance Ministers’ Summit, Macklem noted that discussions among central bankers were candid, highlighting the complexities of international cooperation in today’s economic climate. "International cooperation, to be honest, has never been easy. It is particularly difficult right now, but that doesn’t make it less important. That makes it more important," he stated.

In addition to these discussions, the Bank of Canada is adapting its approach to data collection and analysis. Deputy Governor Sharon Kozicki recently shared insights on how the bank is utilizing surveys and granular data to inform monetary policy decisions. This shift aims to provide a more immediate understanding of economic conditions compared to traditional statistical models.

Macklem acknowledged that the bank previously viewed many supply shocks as temporary but now recognizes the need for a more nuanced strategy to address frequent disruptions, including supply chain issues and extreme weather. He stated, "The economy does not work well when inflation is high. And the primary role of the Bank of Canada is to ensure that Canadians maintain confidence in price stability."

Later that evening, the Edmonton Oilers triumphed in Game 1 of the Stanley Cup finals, winning 4-3 in overtime. As the Bank of Canada navigates these economic challenges, Macklem hopes to apply lessons learned from past experiences to better manage the current situation.