From Financial Post Bank of Canada is sticking with its plan to pause interest rates increases — for now, despite a recent job surge. Read more via financialpost
With the jobless rate at five per cent, a figure that many economists equate with maximum employment, it’s hard to believe that Canada’s economy is in any imminent danger, and might even be growing fast enough to keep upward pressure on inflation.Article content
Several economists said after the latest job numbers that Macklem’s pledge to stop raising interest rates — assuming inflation continued on a downward trajectory — might have been hasty, given that outsized hiring could continue to stoke demand that the Bank of Canada has described as too intense for suppliers of goods and services to match.
“A robust labour market is a challenge for the Bank of Canada,” Charles St-Arnaud, chief economist at Alberta Central, said in a note on Feb. 10. The central bank, “needs to slow growth and create some excess capacity in the economy to fight inflation,” St-Arnaud, a former Bank of Canada economist, continued. “This will likely lead to a rise in the unemployment rate and job losses. With this in mind, continued strength and tightness in the labour market may not be a welcomed outcome for the BoC.
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