High job vacancies have scope to hinder Canada’s economy, warns Macklem

By Ayushi Garg  | Date: October 10, 2022

High job vacancies have scope to hinder Canada’s economy, warns Macklem

Tiff Macklem, Governor of the Bank of Canada, has reportedly stated that there is potential to slow the economy due to an exceptionally high number of job openings in the labor market. Besides, the central bank is currently facing its greatest challenge since it began aiming to reduce inflation 30 years ago.

However, Mr. Macklem assured Canadians that monetary policy is successful and projected that inflation would return to the central bank's 2% target by 2024. Furthermore, Canada's headline inflation rate dropped to 7% in August, but its core inflation remained at approximately 5%.

He added that while the economy does need to cool, it shouldnot be overly so. Theres an unusually large number of open positions in the current economy which is a very obvious indication that the economy could be slowed down without many people losing their jobs, Macklem acknowledged.

Nearly 1 million jobs were being actively sought after by Canadian employers as of July 2022, while the job vacancy rate decreased to 5.4% from a peak of 6% in April of the current year.

It is worth mentioning that in one of its steepest and quickest tightening cycles ever, the Bank of Canada has lifted its benchmark interest rate by 300 basis points since March. Furthermore, on October 26th, economists and the financial markets anticipate a 50-basis-point hike.

According to Mr. Macklem, the economy is beginning to stagnate in areas that are susceptible to an increase in interest rates. What they donot want is for inflation and wages to deviate from their 2% target, as if that happens, they will need to slow the economy further in order to get inflation back to the target level. This is why the Bank has been front-loading the interest rate rises.

Source Credit: https://www.theglobeandmail.com/world/article-canadas-economy-has-scope-to-slow-with-exceptionally-high-vacant-jobs/

About Author

Ayushi Garg     ibmag.com

Ayushi Garg

Currently working as an associate content writer, Ayushi pens down insightful articles for several websites. She began her profession by taking classes in digital marketing to broaden her skills. Given her passion for writing, she took up several freelancing projects ...

Read More