Economic downturn will have uneven effects, warns Bank of Canada

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Economic slowdown will have uneven effects, warns Bank of Canada

Bank of Canada Governor Tiff Macklem.

Bank of Canada Governor Tiff Macklem says that low-income Canadians are the hardest hit by high inflation and will be disproportionately affected by the impending economic downturn.

Speaking at a conference on diversity, equity and inclusion, Macklem noted that high inflation has harmful and unequal effects.

He explained that the rapid pace of the recovery and the rebound in employment were mitigating factors for those most affected by the pandemic, low-income Canadians. income, youth and women.

We are still learning about the longer-term effects of the pandemic, but the scars we were worried about weren't as widespread as we feared, he said. Economic growth returned quickly and workers were not sidelined for long.

The governor emphasized that there is no easy way out for restore price stability, but that ultimately an increase in interest rates would be better for all Canadians.

The Bank of Canada has raised interest rates aggressively this year in response to inflation that has reached highs not seen in nearly four decades. Since March, the central bank has raised its policy rate six times in a row, from 0.25% to 3.75%.

Despite a slight decline in inflation in September, the price of food purchased from stores continued to rise, posting an 11.4% year-on-year jump.

Higher interest rates are expected to slow the economy significantly, with a risk that rapidly rising rates could push the economy into recession.

Labor groups have been vocal about the Bank of Canada's efforts to rein in inflation, raising concerns about what the downturn will mean for workers.

The governor has previously said unemployment will rise as the economy slows, but is unlikely to reach high levels by historical standards.

While this is not a substitute for higher interest rates, the increased supply in the economy will help dampen inflation, Macklem said, adding that the more we do to help supply grow, the less demand will need to be contained.

Mr. Macklem also addressed the existence of inequalities in the discipline of economics.

Speaking on the theme of the conference, Mr. Macklem recalled that the #MeToo movement also exists in economics and recognizes that women in the field had to deal with the added burden of harassment.

He says he has worked to create a culture of respect at the Bank of Canada. Canada and acknowledged that his female colleagues had experienced harassment he had never had to deal with.

Let me be clear. Harassment of any kind can never be ignored, excused or brushed aside, he said.

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