Bank of Canada chief: Supply chain problems mean inflation set to be more stubborn

Economy4 minutes ago (Oct 14, 2021 08:06PM ET)

(C) Reuters. Bank of Canada Governor Tiff Macklem takes part in an event at the Bank of Canada in Ottawa, Canada, October 7, 2021. REUTERS/Blair Gable/Files

By Julie Gordon and David Ljunggren

OTTAWA (Reuters) – Global supply chain bottlenecks are not easing as quickly as expected, meaning inflation in Canada and among IMF members will probably take a little longer to come down, the governor of the Bank of Canada said on Thursday.

Those issues will weigh on Canada’s near-term economic recovery, meaning it is reasonable to expect that an expected rebound will not be as fast as the central bank forecast in July, Tiff Macklem told reporters after attending International Monetary Fund meetings in Washington.

“These bottlenecks are not easing as quickly as expected. And there was certainly a strong consensus these issues warrant continued attention and they are going to take some time to work through,” Macklem said of his talks with central bankers.

“What this all means, in all our countries, is that inflation – measures of inflation – are probably going to take a little longer to come back down,” he continued.

The concern now, he said, was that bottlenecks looked to be more complicated and persistent than previously thought, although they continue to be viewed as transitory.

Macklem also looked to quell public criticism over the bank’s stance that high inflation is temporary. Canada’s inflation rate accelerated to 4.1% in August, well above the 2% midpoint of the bank’s 1-3% control range.

“Our job … is to make sure that these one-off price increases don’t become ongoing inflation. We think there’s good reasons to believe that these are one-off price increases. They won’t create ongoing inflation,” he said.

Macklem also said slack remained in Canada’s labor market, despite employment returning to its pre-pandemic level in September.

“It is an important milestone, but it’s not the destination,” he said. “We’ve had growth in our labor force … so slack in the labor market remains.”

Pointing to young people and women, he said: “Job growth has been particularly concentrated in the areas that needed it most.” But low-wage worker employment is still well below pre-pandemic levels, he added.

Bank of Canada chief: Supply chain problems mean inflation set to be more stubborn

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

More than 1,400 firms went bust last month in England and Wales

The number of businesses going bust in England and Wales jumped last month to its highest level since the start of the pandemic, as...

China launches second crewed mission to build space station

World59 minutes ago (Oct 15, 2021 11:06PM ET) 4/4 (C) Reuters. The Long March-2F Y13 rocket, carrying the Shenzhou-13 spacecraft and three astronauts in China's second...

U.S. offers payments, relocation to family of Afghans killed in botched drone attack

World22 minutes ago (Oct 15, 2021 09:55PM ET) (C) Reuters. FILE PHOTO: The Pentagon logo is seen behind the podium in the briefing room at...

Subscribe here

Latest Posts