Free Trial

MNI BRIEF: Highlights Of BOC Governor Macklem Speech

Following are key passages from Bank of Canada Governor Tiff Macklem's speech Thursday in Toronto:

"We’re trying to balance the risks of over- and under-tightening monetary policy."

"The Government and the Bank also agree that monetary policy should continue to support maximum sustainable employment. We recognize that maximum sustainable employment is not directly measurable and is determined largely by non-monetary factors that can change through time. This reflects the reality that maximum sustainable employment is more of a concept than a number. In practice, knowing when we’ve reached it is difficult because we have to infer where it is, and labour market indicators give us clear signals only when we are well above or below it.

"The adjustment is not painless. Lower vacancies mean it could take longer to find a job, and some businesses will find that with less demand for their products, they don’t have enough work for all their workers. But relieving the pressure in the labour market will contribute to restoring price stability."

"As we watch to see how the economy is responding to higher interest rates, we expect that some parts of the economy will be more sensitive to higher borrowing costs and will slow earlier or more sharply. The response will be somewhat uneven. Some industries more than others will see fewer vacancies or even job losses."

"Monetary policy has begun to have an impact, but it will take time for the effects of higher interest rates to spread through the economy and reduce demand and inflation."

"But because the labour market is so hot and we have an exceptionally high number of vacant jobs, there is scope to cool the labour market without causing the kind of large surge in unemployment that we have typically experienced in recessions."

"The economy is in excess demand, the job market is too tight, and inflation is too high. Monetary policy has begun to have an impact, but it will take time for the effects of higher interest rates to spread through the economy and reduce demand and inflation."

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.