(Toronto) Bank of Canada Governor Tiff Macklem said Thursday that Canada’s low unemployment rate is unsustainable and contributing to high inflation.
In the text of a speech to the Public Policy Forum in Toronto, Macklem says the country’s labor market needs to be rebalanced to stabilize the highest inflation in decades.
The governor pointed out that businesses struggling to find workers could not meet the demand for goods and services in the economy, fueling rising prices.
Mr Macklem added that a rebound in immigration levels would help businesses grow and reduce inflation.
He further argued that other policies such as improving universal child care would help increase the proportion of women in the workforce, but noted that this would take time.
However, the governor stressed that these policies are not a substitute for using interest rates to dampen demand in the economy and dampen inflation.