BOC’s Macklem: Trade disruptions may mean larger deviations from our target

• Trade disruptions also increase variability of inflation
• We have to focus on risk management, balancing upside risks to inflation with downside risks to economic growth
• Cost of global goods many not fall as fast as globalization, and that could put more upward pressure on inflation
• Global trade has slowed and that is a big concern for Canada
• The growth we are seeing in trade is shifting from goods to services, pandemic may have provided a more durable boost to trade in services
• Seemingly vast potential of digitalization suggests future growth in trade will tilt to services

The last comment on digitlization is a notable one for the long-term macro view of the world. Digital services are a seeming winner-take-all and the winners will likely be AI agents. Managing that will be a huge challenge for economies.

This article was written by Adam Button at www.forexlive.com.