Bank of Canada Governor Tiff Macklem said on September 2 that persistent energy costs could force the central bank to raise rates if inflation remains elevated, even as U.S. tariffs threaten to push fourth-quarter GDP growth below 1% on an annualized basis, roughly half earlier forecasts. Canada’s Consumer Price Index is running at approximately 3%, above the Bank’s 2% target, while oil prices approach US$100 per barrel and supply disruptions raise fuel, heating and business costs. The Bank held its overnight policy rate at 2.25% for a seventh consecutive meeting. The latest 50% U.S. tariffs, effective August 22, cover approximately 5% of Canadian goods exports, while Canada’s dollar-for-dollar counter-tariffs are scheduled to begin September 8. Analysts estimate the measures could reduce GDP by roughly 0.3% to 0.4%, with federal support programs expected to cushion affected industries. Macklem said the Bank is using analytical tools, including the Prima model, to distinguish temporary energy shocks from persistent inflation, while businesses and investors assess risks to hiring, investment, bond yields and rate-sensitive sectors ahead of the CUSMA review.