(OTTAWA) Bank of Canada Governor Tiff Macklem says low-income Canadians are hardest hit by high inflation and will be disproportionately affected by the impending economic downturn.
In a conference on diversity, equity and inclusion, Macklem notes that high inflation has harmful and unequal effects.
He says the rapid pace of recovery and the rebound in jobs have been mitigating factors for those hardest hit by the pandemic: low-income Canadians, youth and women.
“We’re still learning about the long-term effects of the pandemic, but the scarring we were concerned about wasn’t as widespread as we feared,” she says. Economic growth returned quickly and workers weren’t sidelined for long. »
The governor stresses that there is no “easy solution” to restore price stability, but that the end result of raising interest rates would be better for all Canadians.
The Bank of Canada has aggressively raised interest rates this year in response to inflation that has reached levels not seen in nearly four decades. Since March, the central bank has raised its key rate six times in a row, from 0.25% to 3.75%.
Higher interest rates are expected to slow the economy considerably, with the risk that a rapid rate hike could push the economy into a recession.
Union groups have spoken out about the Bank of Canada’s efforts to curb inflation, raising concerns about what the recession will mean for workers.
The governor has previously said unemployment will rise as the economy slows, but it is unlikely to reach high levels by historical standards.
While that won’t replace higher interest rates, increasing supply in the economy will help dampen inflation, Macklem said, adding that the more that is done to help grow supply, the less demand will need to be. contained.
Sexual harassment in the economy, a reality
Mr. Macklem also mentions inequalities in the discipline of economics.
Speaking on the conference theme, Macklem recalls that the #metoo movement exists in business as well and acknowledges that women in the industry have faced the added burden of harassment.
She says she has worked to create a culture of respect at the Bank of Canada and acknowledged that her female colleagues had experienced harassment she had never faced.
“Let me be clear. Harassment of any kind can never be ignored, excused, or ignored,” she says.
