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BoC's Gov. Macklem notes that core inflation has ticked down BoC's Gov. Macklem: The bank would also look at inflation expectations when mulling a possible rate hike. BoC's Gov. Macklem: Any Bank of Canada decision on a possible rate hike is less about a timeline and more about conditions. BoC's Gov. Macklem: Not a lot has changed since our last decision; there have not been big data surprises. BoC's Gov. Macklem: The Canadian economy is not clearly in a recession; the economy is weak but not in a recession.

Good morning. I’m pleased to be here with Senior Deputy Governor Carolyn Rogers to discuss today’s monetary policy decision. Governing Council maintained the policy interest rate at 2.25%. Since our April decision, the economic impact of the ongoing conflict in the Middle East has increased. Higher energy prices and disruptions in global supply chains are weighing on global growth and pushing up inflation. At the same time, the US administration continues to propose new tariffs and trade policy uncertainty remains elevated. Against this backdrop, the Canadian economy has remained soft and inflation has increased. Monetary policy continues to be focused on ensuring higher energy prices do not turn into persistent inflation, while helping the economy adjust to headwinds. We are committed to keeping inflation low and stable over time. Let me expand on what we’re seeing since the April Monetary Policy Report and the monetary policy implications. The conflict in the Middle East is slowing economic activity in the Gulf region and in many oil-importing countries, and sending inflation higher worldwide. At the same time, AI-related investment is boosting growth in the United States and some Asian economies, and equity markets have been buoyant. In Canada, GDP edged down 0.1% in the first quarter, weaker than expected at the time of the April Report. Consumer spending grew by 1.4% but there was an unexpected pullback in government spending. Housing activity also declined and business investment remained weak. While the labour market strengthened in May and the unemployment rate fell to 6.6%, there has been a lot of volatility in the monthly job numbers. When you look through the bumpiness, employment in Canada is little cha BOC: There has been limited evidence so far of a broad-based pass-through of higher energy prices to other consumer prices. Bank of Canada monetary policy remains aimed at preventing higher energy costs from becoming lasting inflation: Governor Tiff Macklem For now, holding rates steady balances risks: Macklem Economic weakness and rising inflation create challenge for monetary policy: Macklem