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Bank of Canada Governor Macklem said on Monday that new U.S. tariffs could slow Canada's fourth-quarter economic growth to below 1%. Macklem said that when the central bank assesses interest rate policy, it needs to consider two factors: slower economic growth may push inflation down, but higher oil prices caused by Middle East conflicts could in turn push inflation up. He said Canada's current annual inflation rate is 3%, well above the central bank's 2% target; if oil prices remain around $100 per barrel, the inflation rate could rise slightly further. Canada's economy rebounded in the second quarter, with an annualized growth rate of 3.3%. After nearly 18 months of U.S. tariff impacts, businesses and households began adjusting their plans and resuming investment and spending arrangements. However, as negotiations over a potential trade agreement between the two countries broke down, U.S.-Canada relations deteriorated further, and the United States introduced a new round of tariff measures. Macklem said: "The latest round of escalation may once again lead businesses to postpone investment and hiring decisions." He said that if these new tariffs persist, Canada's fourth-quarter economic growth could be roughly halved, falling below 1%.