Adapting Canada’s economy to U.S. tariffs, slower population growth, and the spread of artificial intelligence will take years and may be painful, Bank of Canada Governor Tiff Macklem said on Thursday. He urged policymakers and businesses to do everything possible to meet these challenges, stressing that Canada cannot afford to fall behind.

Last week, the central bank kept its key rate at 2.25% for a second straight meeting, reiterating that rates will remain unchanged as long as the economy broadly follows its projections. At the same time, the Bank noted that uncertainty around its outlook is unusually high. Macklem also highlighted the difficulty of separating structural shifts from cyclical movements, underscoring the need to correctly assess economic weakness.

Today, markets await Canada’s labor market data.

Expectations of possible Fed rate cuts could support the Canadian dollar, but for now USD/CAD has only stabilized after a recent rise, with no clear downside signals.