Inflation would be eased by growth in the total number of potential and active employees nationwide, BoC governor says
The Canadian labour market needs a rebalancing if it is to address the nation’s record-high inflation rates, according to Bank of Canada governor Tiff Macklem.
In a speech before the Toronto Metropolitan University yesterday, Macklem said that businesses that are struggling to increase their workforces are unable to keep up with current activity levels.
“The tightness in the labour market is a symptom of the general imbalance between demand and supply that is fuelling inflation and hurting all Canadians,” Macklem said.
Read more: Canada sees huge October jobs surge
Inflation would be eased by growth in the total number of potential and active employees nationwide, Macklem added.
October labour figures are a possible indication that this growth is already underway, with the addition of more than 100,000 jobs last month while unemployment held steady at 5.2%.
The federal government’s boosted immigration targets, with 500,000 people to arrive from outside Canada annually by 2025, will also help with the rebalancing, Macklem said.
However, the governor said that these policies will still need to act in concert with the central bank’s interest rate hikes if inflation is to be truly moderated.
“New workers will have new incomes, and that will add to spending in the economy,” Macklem said. “That’s why increasing supply, while valuable, is not a substitute for using monetary policy.”
