Bank of Canada warns of “tough job” as structural shifts reshape economy

Speaking in Manitoba, Rogers said persistent U.S. trade protectionism, tighter immigration policies and the rise of artificial intelligence are driving long-term changes to Canada’s economic landscape.

“These are not temporary forces,” she said, adding they will affect growth, productivity and inflation.

Rogers said the central bank must adapt to these shifts rather than counter them. “When encountering a structural shift … we must adapt. We need to revise our perspectives, our forecasts, and our decisions to align with the new reality,” she said in a statement. 

She added, “My colleagues and I at the Bank are preparing ourselves for a challenging road ahead.”

The Bank is reviewing its monetary policy framework but intends to maintain its 2% inflation target, which Rogers said has helped anchor expectations despite recent price surges.

On affordability, she said inflation has eased to near target but Canadians continue to feel pressure from elevated living costs, particularly housing and food.

Rogers also warned that rising energy prices linked to geopolitical tensions, including conflict involving Iran, could push inflation higher in the near term.

The Bank recently held its policy rate at 2.25% and will continue to assess global risks as it sets future policy, she said.