Canada’s economy has scope to slow with ‘exceptionally high’ job vacancies, central bank governor says
TORONTO, Oct 9 (Reuters) – Bank of Canada Governor Tiff Macklem said there was scope to slow the economy based on an “exceptionally high number” of job openings in the job market.
In an interview aired on CBC Radio on Sunday, Macklem said the current inflation battle is the biggest test the central bank has faced since it began targeting inflation 30 years ago.
But he reassured Canadians that monetary policy was working and he expected inflation to return to the central bank’s 2% target by 2024. Canada’s headline inflation rate fell to 7.0% in August, with core inflation hovering around 5%. Continue reading
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“We need to cool the economy, (but) we don’t want to overcool the economy,” Macklem said.
“If we look at the economy now, there is an exceptionally high number of job vacancies…this is a clear signal that there is scope to slow down the economy without putting many people out of work,” he added.
Canadian employers actively sought to fill nearly 1 million jobs in July, data released Friday showed, while the job vacancy rate fell to 5.4% in July, from a peak of 6.0% in April 2022. read more
The Bank of Canada has hiked its benchmark interest rate by 300 basis points since March, in one of its steepest and fastest tightening cycles ever. Economists and money markets are trending for a 50 basis point hike on October 26th.
Macklem said parts of the economy that are sensitive to rate hikes are beginning to slow.
“Let me be clear, what we don’t want is … for inflation and wages to move away from our 2% target, because if that happens we actually have to slow down the economy a lot more to get inflation to 2% return. That’s what we call bringing forward our rate hikes,” Macklem added.
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Reporting by Denny Thomas in Toronto Editing by Matthew Lewis
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