As a potential recession looms, unemployment will rise, but Bank of Canada governor Tiff Macklem says job losses wonB次元官网网址檛 fall to levels seen in past economic downturns.

CanadaB次元官网网址檚 job market has remained strong despite growing forecasts that a slowdown is on the horizon.

B次元官网网址淲e donB次元官网网址檛 expect a large increase in unemployment in the way weB次元官网网址檝e seen in past recessions,B次元官网网址� Macklem said before students and researchers at Toronto Metropolitan University Thursday. B次元官网网址淲eB次元官网网址檙e not expecting high unemployment by historical standards.B次元官网网址�

The governor said the countryB次元官网网址檚 current low unemployment rate is not sustainable and is contributing to decades-high inflation.

He said the Canadian labour market needs to be rebalanced to stabilize inflation.

The countryB次元官网网址檚 unemployment rate held steady at 5.2 per cent last month as the Canadian economy surprised forecasters by adding more than 100,000 jobs. The strong job numbers came after four months of losses or little growth in employment.

Macklem said businesses struggling to find workers canB次元官网网址檛 keep up with demand for goods and services in the economy.

B次元官网网址淭he tightness in the labour market is a symptom of the general imbalance between demand and supply that is fueling inflation and hurting all Canadians,B次元官网网址� he said.

That imbalance, he said, is in part due to an aging population increasing retirement levels as well as low immigration during the pandemic.

To get demand and supply back in line with each other, Macklem said a slowdown is necessary.

B次元官网网址淪o what does that mean for Canadian workers? Well, itB次元官网网址檚 clear that the adjustment is not painless,B次元官网网址� he said.

In reaction to Statistics CanadaB次元官网网址檚 recent strong job report, Macklem said itB次元官网网址檚 not unusual to see fluctuations in the monthly job numbers.B次元官网网址�

B次元官网网址淲hat I take away from the last several months is we continue to have an economy that is in excess demand.B次元官网网址�

In his speech, the governor said policies that increase the number of available workers would help ease inflation, noting immigration is one of them.

Other polices such as the expansion of universal childcare will help increase the proportion of women in the workforce, he said, but noted it will take time.

The governor, however, stressed that these policies are not substitutes for using interest rates to clamp down on high inflation.

B次元官网网址淣ew workers will have new incomes, and that will add to spending in the economy,B次元官网网址� Macklem said. B次元官网网址淭hatB次元官网网址檚 why increasing supply, while valuable, is not a substitute for using monetary policy.B次元官网网址�

Last month, the Bank of Canada raised its key interest rate for a sixth consecutive time this year. The central bank has signalled itB次元官网网址檚 drawing closer to the end of whatB次元官网网址檚 been one of the fastest rate hike cycles in its history.

Economists expect one or two more interest rate hikes are still to come.

The rate hikes are in response to inflation reaching the highest level seen in nearly four decades. In September, the inflation rate was 6.9 per cent, well above the central bankB次元官网网址檚 two per cent target. It has been steadily declining since reaching a high of 8.1 per cent in June.

Statistics Canada is expected to publish its latest consumer price index report on Wednesday, shedding light on how inflation evolved in October.

Macklem said the central bank will be paying attention to core measures of inflation in particular, which tend to be less volatile than the headline number.

Nojoud Al Mallees, The Canadian Press

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