Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

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

Published 10/14/2021, 08:00 PM
Updated 10/14/2021, 08:17 PM
© 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

© 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.

© Reuters. FILE PHOTO: Bank of Canada Governor Tiff Macklem arrives to a news conference in Ottawa, Ontario, Canada September 10, 2020. REUTERS/Blair Gable/File Photo/File Photo/File Photo

"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.

Latest comments

0% interest rate forever. This is the new economy. Inflation is not a problem. You have only to say that is "transitory" for years. At some point it will drop.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.