(adds comment on labor market)
OTTAWA, Oct 14 (Businesshala) – Global supply chain bottlenecks are not easing 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. Said to
Tiff McCalem told reporters after attending International Monetary Fund meetings in Washington that those issues would weigh on Canada’s near-term economic recovery, meaning it’s reasonable to expect the central bank’s forecast in July The rebound will not be as sharp as expected.
“These bottlenecks are not reducing as expected. And of course there was a strong consensus that these issues need to be addressed continuously and they are going to take some time to work through,” McCalem said of his conversations with central bankers.
“What this means in all of our countries is that inflation – the measure of inflation – is probably going to take a little longer to come back,” he continued.
The concern now, he said, was that the bottlenecks appeared to be more complex and persistent than before, although they continue to be seen as fleeting.
Macklem also quelled public criticism over the bank’s stance that high inflation is temporary. Canada’s inflation rate rose to 4.1 percent in August, well above the 2% midpoint of the bank’s 1-3% control range.
“Our job … is to ensure that these one-time price increases do not become ongoing inflation. We think there are good reasons to believe that these are one-time price increases. They will not create ongoing inflation,” he said.
Macklem also said Canada’s labor market remained sluggish despite jobs returning to their pre-pandemic levels in September.
“It’s an important milestone, but it’s not the destination,” he said. “We have increased our labor force … so the labor market remains sluggish.”
Pointing to young people and women, he said: “Job growth is particularly focused in the areas that need it most.” But low-wage worker employment is still well below pre-pandemic levels, he said. (Reporting by Julie Gordon and David Ljunggren in Ottawa; Editing by Peter Cooney)