Bank of Canada Governor Tiff Macklem says the economy is still overheating and the labor market is too tight.
The central bank governor’s comments come after Statistics Canada’s most recent labor force survey found the economy added 150,000 jobs last month, as unemployment rates hover around record lows.
In testimony to the House of Commons Standing Committee on Finance on Thursday, Macklem told MPs the economy was in excess demand, which is putting upward pressure on prices. This pressure is exerted despite the efforts made by the Bank of Canada to slow the economy and calm inflation. The central bank has raised its key interest rate eight times since March 2022, to 4.5%, its highest level since 2007.
After announcing last month that the central bank would temporarily suspend interest rate hikes, Macklem clarified on Thursday that he remained prepared to raise rates further if inflation turned out to be stronger than expected. Statistics Canada is expected to release its January inflation data on Tuesday.
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