During a public speech, Bank of Canada Governor Tiff Macklem said that low-income Canadians are suffering the most due to high inflation and a slowing economy.
“Lower-income households feel the burden of high inflation the most,” Macklem said while delivering remarks at a central bank conference on diversity, equity and inclusion. “Lower-income Canadians will also be disproportionately affected by the (economic) slowdown.”
The central bank governor added that the COVID-19 pandemic did not have as big an impact on Canada’s labour market as initially feared.
“We are still learning about the longer-term effects of the pandemic, but the scarring we were worried about wasn’t as pervasive as we had feared," he said. "Economic growth came roaring back quickly, and workers did not remain on the sidelines for long.”
Macklem said that there is “no easy out” to restore price stability and lower inflation, but that the economy and Canadians will be better off in the long run once consumer prices come down.
The Bank of Canada has raised interest rates multiple times this year to lower inflation. Since March, the central bank has raised its benchmark interest rate six consecutive times, lifting it from 0.25% to its current level of 3.75%.
There are concerns that higher interest rates could push Canada’s economy into a recession next year (2023). Economic data in recent months has showed signs that the Canadian economy is slowing down from the pace of growth seen over the past two years.
