BoC's Macklem: Signs of financial stress are particularly evident, but inflation heading lower
|Bank of Canada (BoC) Governor Tiff Macklem touched on monetary policy during a luncheon on Monday. Further points are expected from the BoC Governor later in the day.
Key highlights
We continue to think that we don't need a large rise in the jobless rate to get inflation back to the target.
With inflation now much lower and the labor market rebalancing, we are starting to see evidence that wage growth is moderating.
Some people are finding it harder to get a job, particularly young people and newcomers to Canada.
Signs of financial stress are particularly evident among renters, who are often younger workers and newcomers.
We can't rule out new bumps but increasingly we look to be on our way to hitting the target.
There is room for the Canadian economy to grow and add jobs even as inflation moves closer to the 2% target.
In assessing implications of wage growth for labor costs and inflation, it is important to separate out wage gains that reflect productivity improvements.
The government has some room to slow the growth of non-permanent residents without tightening the labor market too much.
Going forward we will be looking for wage growth to moderate further.
There are a number of reasons to believe there could be more supply shocks going forward than we've seen over the last 25 years.
The BoC is looking for further moderation in wage gains.
It's reasonable to expect further cuts.
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