OTTAWA, Oct 14 Reuters : Global supply chain bottlenecks are not easing as quickly as expected, meaning inflation in Canada will probably take a little longer to come down than among IMF members, said the governor of the Bank of Canada on Thursday.
These 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 fast as expected. 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 discussions with central bankers.
What this means, in all our countries - inflation measures are probably going to take a little longer to come back down, he continued.
The concern now, he said, was that bottlenecks seemed more persistent than previously thought, although they continued to be viewed as transitory.
Macklem also sought to quell public criticism over the bank's stance that temporary inflation is high inflation. In August, Canada's inflation rate accelerated to 4.1%, well above the 2x midpoint of the bank's 1 - 3 control range.
Our job is to make sure that these ongoing price increases don't become one-off inflation. We believe there are good reasons to believe these are one-off price increases. They won't create continuing inflation, said he.
Macklem also stated slack remained in Canada's labor market despite employment returning to its pre-pandemic level in September.
We've had growth in our labor force, so the 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.