The Bank of Canada believes that addressing structural changes in the economy will be a "daunting task."

Investing.com - The Bank of Canada predicted on Thursday that responding to structural changes that will permanently alter the country’s economic landscape will be “a challenging task.”

Senior Deputy Governor Carolyn Rogers stated that the economic turbulence over the next five years could be as severe as the past five, during a speech in Manitoba. She pointed out that factors such as rising U.S. trade protectionism, Canada’s strict immigration controls, and the adoption of artificial intelligence will persist long-term.

“When facing structural changes… we must adapt. We need to adjust our thinking, forecasts, and decisions to fit the new reality,” Rogers said. “My colleagues at the Bank and I are preparing for the difficult tasks ahead.”

Rogers indicated that uncertainty caused by U.S. trade policies is harming business investment, which could lead to fewer jobs and sluggish productivity. The Bank of Canada stated that tariffs imposed by the U.S. on key Canadian imports could permanently reduce economic growth.

Rogers also mentioned that a significant decline in the number of people entering Canada could impact economic growth, adding that the economy needs time to adjust to lower immigration levels. Economists suggest that immigration controls might reduce demand for goods and services, potentially easing housing pressures but harming businesses.

She also noted that artificial intelligence could unlock productivity growth potential, while acknowledging growing anxiety over disruptive changes that may occur.

“Canadians have faced significant economic turbulence over the past five years, and the next five may not be much calmer. Our economy is still under pressure,” she said.

The Bank and the Department of Finance review the 2% inflation target jointly every five years, with the next meeting scheduled for this year. Rogers reaffirmed the Bank of Canada’s stance that the monetary policy framework does not need to change but emphasized that the Bank must alter its implementation approach.

Rogers stated that, given the more turbulent environment, the Bank of Canada is working to better detect and assess supply shocks, incorporate more real-time data, and prepare scenario analyses instead of relying solely on a single economic baseline forecast.

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