Macklem Just Flagged a New Risk: Moving Too Slowly

What Macklem actually said

Bank of Canada Governor Tiff Macklem delivered a speech in Halifax, Nova Scotia on September 21, 2026, followed by a press conference. The venue was routine. The message was not.

For most of 2026, the Bank's public language has centred on holding steady and waiting for more data. Macklem's Halifax remarks were different in emphasis. He spent real time explaining what it costs the economy if officials wait too long to respond to inflation — not just the case for staying put (Canadian Mortgage Trends, citing a Bloomberg wire report of the speech).

The reason he gave is specific: the conflict in the Middle East has increased the risk that inflation stays elevated and broadens beyond the sectors already feeling it. That is a geopolitical trigger, not a domestic one, and it is largely outside the Bank's control — which is exactly why he framed it as a risk to manage rather than a certainty to plan around.

Why moving late costs more than moving on time

Asked to expand on the risk of falling behind, Macklem laid out a two-part mechanic that is worth reading in full, because it is the clearest explanation the Bank has given this year for why timing matters as much as direction.

And secondly, you're probably going to end up having to raise them more than if you moved earlier because things will have gotten more out of hand.— Tiff Macklem, Bank of Canada Governor

In plain terms: a central bank that waits too long to respond to persistent inflation doesn't just move later — it typically has to move further, and faster, to catch up. That is the scenario a borrower with a variable structure would feel directly, and it is also the scenario that pushes bond markets — which set the pricing on fixed terms — to move in anticipation, sometimes before any official change happens at all.

Macklem was equally clear that this cuts both ways. He said pushing borrowing costs higher while inflation pressure is genuinely contained would weaken growth "for no real benefit." The Bank is not signalling a preference for higher costs — it is signalling that the risk of being late now outweighs, in its own assessment, the risk of moving a touch early.

The tariff caveat, and why it doesn't cancel the risk

The same speech contained a genuine counterweight. Macklem downplayed the direct hit from the latest round of U.S. tariffs on the broader Canadian economy, while still warning the affected sectors would feel real pain.

We don't expect a large direct effect... The affected products represent about 5% of Canada's goods exports to the United States, and federal government support programs should mitigate some of the harm.— Tiff Macklem, Bank of Canada Governor

But he also flagged a fourth-quarter growth hit if the tariffs stay in place, and the uncertainty around them could delay business investment and hiring on its own — a separate drag from the tariffs themselves.

If these new tariffs remain in place, growth could be roughly halved in the fourth quarter, to below 1%.— Tiff Macklem, Bank of Canada Governor

That is the tension a homeowner is actually sitting inside right now: one set of pressures (gas prices, the Middle East, sticky inflation) arguing for the Bank to lean toward moving sooner, and another (soft growth, tariff-driven uncertainty) arguing for patience. Macklem did not resolve that tension in the speech. He named it, and said the Bank's newest tool exists specifically to help sort one kind of pressure from the other.

Gas prices, the 3% reading, and a new model called Prima

The consumer price index's yearly change has stayed close to 3% for months, and Macklem attributed most of that to higher gasoline prices — the same driver this site covered when the Bank's own September summary first flagged gas as a possible trigger for a policy response (see our earlier piece on that September warning).

What's new here is the conditional Macklem attached to it: if oil prices stay near $100 a barrel, he said, inflation is expected to edge up further in the coming months. That is a narrower, more concrete threshold than the Bank has usually offered in public remarks, and it gives a borrower something specific to watch rather than a vague "we're monitoring the situation."

• The Bank's benchmark setting has sat at 2.25% through repeated holds this year.
• Macklem posed the open question directly: does holding there bring inflation back to the 2% target on its own, or does the Bank need to push the benchmark higher to get there.
• A new internal forecasting model, Prima, is built to help separate temporary inflation pressure (like a gas price spike) from pressure that looks likely to stick around.
• Prima debuts in the Bank's October Monetary Policy Report — the next scheduled point where this question gets a fuller public answer.

A new model doesn't settle anything by itself, but it does say something about how seriously the Bank is treating the temporary-versus-persistent question. Building a dedicated tool for it, and naming it publicly ahead of its first real use, is not something a central bank does for a question it considers closed.

What this means for a decision you're making now

None of the above is a forecast, and nothing here should be read as one. It's a signal that the range of plausible outcomes over the next few months has widened, in a direction the Bank itself has now put in writing. If you're choosing a structure, or deciding whether to lock in a renewal now versus waiting for the October announcement, that widened range is the thing to plan around — not a guess about which way the Bank ultimately goes.

A variable structure moves with the Bank's benchmark directly, so this is the scenario that touches it first if borrowing costs do move. A fixed term is priced off the bond market, which often reacts to a speech like this one before any official change happens at all — so "wait and see" is not automatically the lower-risk path either.

This is exactly the kind of decision our Compare tab was built for — running a fixed structure and a variable one side by side against your actual numbers, rather than against a headline. If you're up for renewal in the next few months, our Mortgage Renewal page walks through why a straight renewal with your existing lender doesn't reopen your qualifying test the way switching lenders does — a distinction that matters more, not less, when the direction of borrowing costs is genuinely uncertain. And if the goal is freeing up equity rather than renewing what you have, refinancing is a separate conversation with its own timing considerations.