Bank of Canada Governor Tiff Macklem said Monday that there is enough room in the Canadian labor market to allow for growth and job creation, even if the inflation rate continues to rise. lower.
Earlier this month, the central bank cut its key rate for the first time in more than four years and said further cuts were likely if inflation continued to show it was on a sustainable path back to normal. the 2% target.
Mr. Macklem told the Winnipeg Chamber of Commerce that some people, particularly young workers and newcomers, are having a harder time finding jobs.
“The Canadian economy has ample room to grow and create jobs, even if inflation continues to approach the target,” he said.
Mr. Macklem said the bank did not believe a significant rise in the unemployment rate was necessary to meet the 2% inflation target, a combination of factors he called a soft landing scenario. .
“The path has always been narrow and we have not yet managed to land softly,” he said
The fact that some newcomers are having a harder time finding jobs could help the federal government, which is reducing the number of people allowed into the country after levels exploded during the pandemic, leading to higher housing costs and of population growth.
“These job search difficulties suggest that the government has some room to slow the growth in the number of non-permanent residents without overly tightening the labor market and causing significant labor shortages” , said Mr. Macklem.
The bank has long been concerned about year-over-year wage growth, but Macklem said there are signs it is starting to moderate.
He did not mention a timetable for possible further easing. Before he spoke, money markets were expecting there to be a 73% chance that rates would be cut again in July and that there would be a total of three more cuts of 25 basis points this year.
The annual inflation rate slowed to 2.7% in April, its lowest level in three years, marking four consecutive months below 3%. Core measures of inflation – which are closely monitored by the bank – also continued to fall.
Statistics Canada is scheduled to release May inflation data on June 25.
The Bank of Canada’s next monetary policy decision is scheduled for July 24, when it will also update its economic forecast.
(Reporting from Reuters Ottawa bureau)
Keywords: CANADA CENBANK/
