Bank of Canada Governor Tiff Macklem is currently in Washington for the spring meetings of the International Monetary Fund and World Bank, where he has addressed two key issues impacting the Canadian economy: the cybersecurity risks posed by artificial intelligence and the Bank's approach to managing inflation.
Macklem warned that global financial systems need to "come to grips" with the risks presented by rapidly advancing AI models, specifically mentioning Anthropic's new Mythos AI. This AI is said to be capable of quickly detecting cybersecurity vulnerabilities, raising concerns among financial institutions and regulators. Macklem emphasized that the financial system must prepare for a future where AI can expose and exploit vulnerabilities at unprecedented speeds. The Bank of Canada reportedly held discussions with major banks and financial agencies last week to discuss the potential risks of Mythos to the Canadian financial system.
On the monetary policy front, Macklem indicated that the Bank of Canada will be closely monitoring medium- and longer-term inflation expectations when deciding whether further interest rate hikes are needed this year. While he anticipates March inflation to increase from February's 1.8%, he expects it to remain below 3%. He stressed that the central bank's primary focus is on ensuring inflation returns to the 2% target over the long term. Macklem stated the bank doesn't want to raise interest rates too early and lower growth, particularly when growth is already weak. The Bank of Canada is set to release its Business Outlook Survey and consumer expectations survey on Monday, which will offer insights into how businesses and households are thinking about prices, wages, and spending.
