Canadian economy could slow with ‘unusually high’ job vacancies says central bank government

TORONTO (Reuters) – Bank of Canada Governor Tiff Macklem said there was room for a slowing economy due to an “unusually high number” of job vacancies.

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

But he assured Canadians that monetary policy was working and that he expected inflation to return to the central bank’s 2% target by 2024. Canada’s headline inflation rate has dropped to 7.0% in August, with core inflation around 5%.

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

“When we look at the economy right now, there’s an exceptionally high number of vacancies…it’s a clear signal that it’s possible to slow down the economy, without putting a lot of people out of work. “, he added.

Canadian employers were actively seeking to fill nearly a million jobs 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 benchmark interest rate by 300 basis points since March, one of its steepest and fastest tightening cycles yet. Economists and money markets are leaning towards a 50 basis point increase on October 26.

Macklem said sectors of the economy that are sensitive to interest rate hikes are starting to slow.

“Let me be clear, what we don’t want is for inflation and wages to come off our 2% target because if that happens we’ll actually have to slow down much more. economy to get inflation to 2%. That’s what we call anticipating our interest rate hikes,” Macklem added.

(Reporting by Denny Thomas in Toronto; Editing by Matthew Lewis)

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