BoC Deputy Governor Vincent warns of inflation risks from missteps and said labour market shifts complicate policy
- The more the economy faces shocks accompanied by structural change, the less clear-cut monetary policy decisions will be.
- Monetary policy cannot compensate for lower supply caused by trade friction or population ageing.
- The central bank is exploring more granular data to better understand what is happening in the job market.
- Mistaking structural demand issues for cyclical ones could create inflationary pressures while delaying necessary restructuring.
- Current conditions point to a mild excess supply in Canada’s labour market, which Vincent said is less dynamic than before.
- Canada’s labour market is marked by low turnover, rising long-term unemployment and persistently high youth unemployment.
- Structural changes in labour markets are making the Bank of Canada’s job more complicated.
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