The governor will be happy to answer questions for about 20 minutes in both official languages. We have two journalists in the room and many others participating remotely today. We will take one question per media outlet. Before asking your question, please state your name and affiliation. We'll start with the room first and then turn to the call.
Hello again. Thank you for taking my question. You said just now during your speech that the Iran war had created a supply side shock, which is a dilemma for a central bank. I was wondering, with the peace deal last week, how has that dilemma evolved? Has it become easier to deal with? And by the same token, inflation is at its highest — the latest reading is its highest since 2023. Has that also affected the dilemma in the other direction for you?
Well, look, the Iran-US peace agreement is very welcome news. There's still a lot to be worked out in the peace agreement, so I certainly hope we see continued progress. Markets are forward-looking — you've already seen some drop in the price of oil. The futures curve has come down, and I expect you'll continue to see the futures curve respond to developments. If they're positive, you could see some more; if there's a setback, you could see some backup. So we'll see. With respect to inflation, yes, the agreement and the drop in the price of oil certainly takes some upside risks away on inflation, which does reduce the dilemma. As I said, there's still a long way to go, so we'll have to see. We're still looking at the pressures that are in the pipeline and how those are going to play out. But yes, no question, it's good news and it does take some of the upside on inflation away.
For the next question, we'll go to David Whitehouse from The Banker.
Thank you so much, Governor Macklem. David Whitehouse from The Banker. Given the growing importance of non-bank payment providers, both in Canada and internationally, do you think there's a case for stronger regulation of these non-bank payment providers, both domestically for you in Canada and internationally?
Well, certainly in Canada, the Bank of Canada is well down the track of standing up a regime to supervise retail payments providers. The regime was introduced a few years ago. There is an obligation for retail payments providers to register with the Bank of Canada. Really, what the Bank of Canada's role is, is to ensure that those payment providers are storing the money in secure assets and ensuring that there is sufficient operational resilience. So when I make a payment to you, I can be assured that you're going to get the money, and you can be assured that you're going to get the money. That is in place. We are continuing to work with payments providers. One thing to keep in mind is that when you move beyond bank payments, there are many non-bank providers — something like 1,500 in Canada, and the number's probably growing. So that does mean we've got to be smart about how we do that. It's got to be proportional. We don't want to slow innovation. We want Canadians to benefit from lower cost, faster, more convenient payments. At the same time, we want to make sure that Canadians can have confidence that when they make payments, those payments will be securely delivered.
Passons maintenant à la ligne téléphonique. We'll go to the call now. Just want to remind people on the call to mute their line when not asking a question. We'll go first to Julie Chabenat from AFP, followed by Greg Quinn from Market News International, then Mark Rendell from The Globe and Mail. Donc à vous, Julie, s'il vous plaît.
It's always difficult to identify bubbles at the moment, but we look at valuations relative to historical norms — they are elevated, so that poses a risk. We don't give investment advice. In all transactions there's always a buyer and a seller, so it's not really for us to decide the value of assets. But yes, valuations are stretched relative to historical norms, so that's something we highlighted in our financial stability report. The other thing I'll mention is that in my speech, I highlighted that global imbalances could feed these bubbles. We saw this before the global financial crisis in 2008-09. The problem was mainly subprime mortgages in the United States.
We're going to Greg Quinn, Market News International.
Governor, I may have seen last week that the new Fed chair sort of said at the press conference he's not a fan of things like forward guidance most of the time. I recall that Governor Powell has also sometimes said he didn't always see the usefulness of those code words. Do you agree that there are limits to the usefulness of these kinds of messages about cutting or hiking rates, even at a time when Canada looked — pressed a lot on assumptions about US tariffs and the Iran conflict? And if you could also provide any quick word you might have about the legacy of Alan Greenspan, that would be nice. Merci.
Okay, well let me start on the issue of monetary policy communication. Look, I think it is very important that central banks explain our decisions. I think it's also important that the public and markets have a sense of the central bank's reaction function — in other words, how we would approach different types of situations. At the same time, I share the view that there is a lot of uncertainty, and false precision about what our future moves are going to be — I don't think it is helpful. We're going to take the decisions one at a time based on the best available information. We do publish at the Bank of Canada — we do publish a forecast for inflation, for GDP. We do articulate how we see the economy evolving, and broad brush, we do indicate what the implications are for monetary policy. We don't publish an interest rate path at the Bank of Canada, and I do worry that too much forward guidance becomes false precision, becomes confusing. I'm quite comfortable with our communication approach. I do think that accountability of central banks does mean we have a high responsibility to explain the actions we're taking.
I'm sorry, the second part of your question. Well, Alan Greenspan's record is quite remarkable. He was Fed chairman for many years and dealt with many different circumstances. There's no doubt, I think one of his biggest contributions — he was deeply in touch with the data. He was very evidence-based. He was ahead of his time in looking at alternative indicators and really trying to sift through the data, put the pieces together, and see what it was telling the FOMC, telling the Fed about the economy. That focus on looking at many different types of data and really trying to piece together where they're reinforcing and where there's tension and they're not reinforcing — those things both tell you something.
Next on my list, I have Mark Rendell followed by Craig Lord from CP. Go ahead, Mark.
Thanks for taking the question, Governor. Quick question about the trade talks — the USMCA renewal next week. I'm wondering, how are you guys at the bank modeling a no-extension scenario? And how would you kind of describe to Canadians how you're thinking about the risks of a no-extension and what looks like it's going to be an extended period of uncertainty on the trade front? How are you thinking about that? How would you describe to the average person what we're going to be kind of heading into next week if we don't get an extension to the trade agreement?
