By Paul Vieira

OTTAWA--The threats to the Federal Reserve's independence are adding to the elevated levels of economic uncertainty in Canada, says the country's top central banker.

Bank of Canada Gov. Tiff Macklem was one of eight global central bankers who backed a statement this month in support of Fed chair Jerome Powell, after the U.S. central banker accused the Trump administration of using the threat of criminal prosecution to pressure the U.S. central bank into lowering rates.

Macklem told reporters Wednesday he signed on "because we all need the Fed to work well." He said a perceived threat to the Fed's independence was adding to heightening economic uncertainty in Canada, on top of the economy's struggles to deal with the upheaval in U.S. trade policy.

Canada's financial markets "are particularly integrated with the United States," so a perceived loss of independence at the Fed "would particularly affect us," Macklem said.

Concern about the U.S. central bank has spurred an uptick in bond yields and weakness in the U.S. dollar. Macklem said the U.S. dollar's safe-have role "has been dented," and traders and investors are, instead, opting to buy gold, which this week surpassed the $5,000-an-ounce barrier. The Canadian dollar has strengthened amid U.S. dollar weakness, which could exacerbate conditions for exports already struggling with U.S. tariffs. Most global trade transactions are conducted in U.S. dollars.

President Trump is set to name a replacement for Powell this year as Powell's term is set to expire. Trump said last month on his Truth Social platform that he prefers that the Fed keep rates low amid improving economic data, as opposed to raising rates to curb inflation risks.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

January 28, 2026 12:07 ET (17:07 GMT)

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