Bank of Canada Governor Tiff Macklem delivers the customary pre-Christimas speech on Monday, noted Scotiabank.

The title is "Economic factors shaping Canada's monetary policy" while the text will be available at 3:20 p.m. ET, but no presser, although there will be time for probably light audience question-and-answer session, said the bank.

Macklem hinted this past week that the focus of the speech will be on the process leading up to the next five-year mandate review, stated Scotiabank. He did so by responding to a question on the mandate by saying "I'll have more to say about this next Monday in my year-end speech as we launch the review next year to be ready for 2026."

The current Monetary Policy Framework Renewal agreement with the federal government expires in December 2026. The process toward a new agreement is long and arduous and typically ends with no material changes. But they have to do it, pointed out the bank.

The last one ran a "horse race" between competing monetary policy regimes including price level targeting, nominal gross domestic product targeting, average inflation targeting, tweaking the inflation target itself, and a dual mandate like the Federal Reserve's. That review indicated there would be an open mind, and concluded that the current system was largely best left mostly unchanged as per widely held expectations.

Scotiabank said mostly unchanged because that prior review said that inflation targeting was only a "primary" goal of monetary policy and was peppered with references toward maximum employment and inclusion goals. Every central banker takes into account labor market conditions, but rates rallied on that day because of the references to maximum employment that made it appear as if the BoC's 2% inflation target since 1991 was suddenly being downplayed somewhat.

The fact that Finance Minister ChrystiaFreeland dominated the press conference with Macklem largely looking on didn't help the optics, added the bank.

This must be placed in the proper international context. Changes in governments in New Zealand led to messy volatility in the RBNZ's mandate, recalled Scotiabank. The RBNZ was a pioneer -- so was the BoC -- at inflation targeting, but a change in government added a dual employment mandate, only for another change in government to go back to just inflation targeting. The Reserve Bank of Idia's mandate has changed or been threatened to change many times.

As Canada's economy goes into a period of magnified uncertainty, it needs a stable monetary policy regime, according to Scotiabank. Now isn't the time to experiment -- or to seriously hint at changes -- by adding further risk to the outlook.

Every one of the seven reviews since the initial agreement in 1991 has largely left the framework intact. Yet Macklem's dovish bias and a greater focus on maximum employment than his predecessors could be put to the test should some tariff-related scenarios add to inflation while reducing employment. Such a scenario is feasible in tariff wars depending upon assumptions such as the degree and nature of Canadian retaliation.

Markets might be confused by any mandate experimentation at the BoC, added Scotiabank.