Canada’s economy has room to slow with ‘unusually high’ job openings

Bank of Canada Governor Tiff Macklem said there was room to slow the economy based on an “unusually high number” of job vacancies.

In an interview broadcast on CBC Radio on Sunday, Macklem said the current battle with inflation is the biggest test the central bank has faced since it began pushing for inflation 30 years ago. .

But he assured Canadians that monetary policy was working and that he expects inflation to return to the central bank’s 2% target by 2024. Inflation in Canada has fallen to 7, 0% in August and core inflation was around 5%.

“We need to cool the economy, but we don’t want to cool the economy too much,” Macklem said.

“If we look at the economy right now, there’s an exceptionally high number of vacancies…it’s a clear signal that there’s room to slow the economy without a lot of people are unemployed,” he added. .

Canadian employers were actively looking for vacancies in July, data showed Friday, while the job vacancy rate fell to 5.4% in July from a peak of 6.0% in April 2022.

The Bank of Canada has raised its key rate by 300 basis points since March, one of its strongest and fastest tightening cycles to date. Economists and money markets are leaning towards a 50 basis point hike on October 26.

Macklem said parts of the economy sensitive to rate hikes were starting to slow.

“Let’s be clear: what we don’t want is for inflation and wages to move away from our 2% target, because if that happens, we will have to slow down the economy much more to bring inflation back. at 2%. That’s what we call advancing our rate hikes,” Macklem added. (Reporting by Denny Thomas in Toronto, editing by Matthew Lewis)