{"id":7626,"date":"2021-02-23T18:55:46","date_gmt":"2021-02-23T18:55:46","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2021\/02\/23\/inflation-fears-take-back-seat-as-bank-of-canada-puts-focus-on-jobs-recovery\/"},"modified":"2021-02-23T18:55:46","modified_gmt":"2021-02-23T18:55:46","slug":"inflation-fears-take-back-seat-as-bank-of-canada-puts-focus-on-jobs-recovery","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2021\/02\/23\/inflation-fears-take-back-seat-as-bank-of-canada-puts-focus-on-jobs-recovery\/","title":{"rendered":"Inflation fears take back seat as Bank of Canada puts focus on jobs recovery"},"content":{"rendered":"<div style=\"text-align:center\"><\/div><p> \n<\/p>\n<div id=\"\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> Economy <\/li>\n<\/ol>\n<\/nav>\n<p class=\"article-subtitle\"> &#8216;We can expect a long adjustment process and a protracted recovery&#8217; <\/p>\n<div class=\"article-meta\">\n<div class=\"published-by\">\n<p>Author of the article:<\/p>\n<p> <span class=\"published-by__author\">Kevin Carmichael<\/span> <\/div>\n<div class=\"published-date\">\n<p>Publishing date:<\/p>\n<p> <span class=\"published-date__since\">Feb 23, 2021<\/span> \u00a0\u2022\u00a0 <span class=\"updated-date__since\">2\u00a0hours ago<\/span> \u00a0\u2022\u00a0 <span class=\"published-date__word-count\">2 minute read<\/span> <\/div><\/div>\n<figure class=\"featured-image\"><picture class=\"featured-image__ratio featured-image-category__economy\"><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">Bank of Canada Governor Tiff Macklem said the economy will need support for quite some time.<\/span> <span class=\"credit\">Photo by Reuters\/Blair Gable<\/span> <\/figcaption><\/figure>\n<\/div>\n<div id=\"\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Tiff Macklem\u2019s Bank of Canada is toying with letting the economy run hotter than would have been thought safe only a few years ago, re-enforcing the likelihood that interest rates will remain extremely low for at least another couple of years.<\/p>\n<p data-async=\"\">Macklem, who took over as governor in June, on Feb. 23 observed that the unemployment rate had been unusually low for an extended period of time before the pandemic, and yet inflation never took off.<\/p>\n<p>It could have been a fluke. But in case it wasn\u2019t, Macklem indicated that he and his deputies on the Governing Council agreed that they should probe the limits of their previous understanding of the relationship between employment and inflation.<\/p>\n<p>The pre-pandemic experience suggests the central bank needn\u2019t fear inflation quite as much as it has in the past, which would allow policy-makers a freer hand to stoke economic growth.<\/p>\n<section aria-labelledby=\"moreTopicLabel\" class=\"more-topic\"><button aria-hidden=\"true\" class=\"more-topic__button-prev\" tabindex=\"-1\" title=\"previous\" type=\"button\"\/><button aria-hidden=\"true\" class=\"more-topic__button-next\" tabindex=\"-1\" title=\"next\" type=\"button\"\/><\/section>\n<\/div>\n<div id=\"\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>\u201cBased on past economic cycles, we would have expected inflationary pressure to begin to rise,\u201d the governor said in a virtual speech hosted by the Calgary and Edmonton chambers of commerce. \u201cBut inflation wasn\u2019t threatening to take off. As the pandemic recedes and the recovery continues, we will keep that experience in mind.\u201d<\/p>\n<p>The unemployment rate dropped below six per cent at the end of 2017 and averaged 5.8 per cent until governments shut down most of the economy in March 2020 to fight COVID-19.<\/p>\n<p>That level is supposed to be full employment, according to the Bank of Canada\u2019s understanding of how the economy works. That is, when the jobless rate drops that low, economists at the central bank have long assumed that everyone who wants a job would have one and, therefore, growth would be such that inflationary pressures start to build.<\/p>\n<p data-async=\"\">But inflation was never a major concern. The Consumer Price Index (CPI) averaged annual growth rates of about two per cent throughout that entire period, which is what the Bank of Canada is obligated to achieve. The relationship between the unemployment rate and prices appears to have changed.<\/p>\n<p data-async=\"\">Macklem\u2019s latest remarks suggest policy-makers won\u2019t worry too much about inflation until the jobless rate returns to those pre-pandemic levels, which were the lowest on records dating back to the mid-1970s. We\u2019re a long way from that point now, as the unemployment rate was 9.4 per cent January, according to Statistics Canada\u2019s latest reading.<\/p>\n<p>\u201cWe can expect a long adjustment process and a protracted recovery,\u201d Macklem said. \u201cThe economy will need support for quite some time, and the bank will continue to do its part.\u201d<\/p>\n<p data-async=\"\"><em>\u2022 Email: kcarmichael@postmedia.com | Twitter: <a class=\"twitter-follow-button\" data-evt=\"click\" data-evt-typ=\"User Interaction Click\" data-evt-val=\"{\" click=\"\" source=\"\" type=\"\" link=\"\" name=\"\" layout=\"\" element=\"\" null=\"\" feed=\"\" list=\"\" id=\"\" target=\"\" url=\"\" title=\"\" story=\"\" position=\"\" vertical=\"\" pixels=\"\" href=\"https:\/\/twitter.com\/carmichaelkevin\" rel=\"noopener nofollow\">carmichaelkevin<\/a><\/em><\/p>\n<\/p><\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>\n<br \/>Inflation fears take back seat as Bank of Canada puts focus on jobs recovery<\/a><br \/>\n<br \/>2021-02-23 18:55:46<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Breadcrumb Trail Links Economy &#8216;We can expect a long adjustment process and a protracted recovery&#8217; Author of the article: Kevin Carmichael Publishing date: Feb 23, 2021 \u00a0\u2022\u00a0 2\u00a0hours ago \u00a0\u2022\u00a0&#8230;<\/p>\n","protected":false},"author":2,"featured_media":7627,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/02\/tiff-macklem0223.jpg?quality=90&strip=all&w=288","fifu_image_alt":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-7626","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/7626","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=7626"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/7626\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/7627"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=7626"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=7626"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=7626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}