The growth outlook has been cut and inflation will be higher than expected.
Macklem is the Governor of the Bank of Canada.
The photo was taken by David Kawai.
The Bank of Canada has a benchmark interest rate.
Here are some of the highlights from the Bank's report.
The upside risks to the bank's inflation projection are of greater concern. Canadians are at risk of believing that inflation will stay high over the long term until inflation moves lower. Higher inflation expectations could lead to more pervasive labour costs and inflationary pressures becoming embedded in ongoing inflation.
The Bank of Canada expects the consumer price index to increase by 5.1 per cent in the first quarter and then decrease over the rest of the year. The two-year outlook predicts that the consumer price index will rise by 4.2 per cent this year and 2.3 per cent in 2023. The target of the central bank is two per cent.
The Bank of Canada has cut its forecast for economic growth to four per cent from 4.3 per cent. The central bank plugged revised historical data into their models. Policy-makers feel good about the economy. The labour market has fully recovered from the damage caused by the COVID recession, and they predict the economy will push through the fifth wave of COVID-19. Their calculations show that gross domestic product grew at an annual rate of 5.8 per cent in the fourth quarter, much better than the four-per-cent rate they were anticipating in the fall.
The output gap is the difference between actual economic output and the level of GDP that the central bank associates with the economy. Policy-makers think the gap has been closed and the estimate is between 0.25 and 0.75 per cent.
The Bank of Canada slashed its outlook for Chinese economic growth this year to 3.8 per cent from a previous estimate of 5.3 per cent. Canada's central bankers believe that the correction in China's property markets will result in some of the weakest growth the country has experienced in decades.
