Economics
Bank of Canada Sees Labor Uncertainty Clouding Rate Path
- Deputy governor says full employment has become hard to define
- Central bank sees considerable excess capacity in economy
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A top Bank of Canada official warned the central bank’s ability to gauge when the nation’s economy has reached full employment, and when interest rates need to rise, has become highly uncertain.
Deputy Governor Lawrence Schembri said policy makers are striving to bring the economy to full capacity with employment at its maximum sustainable level. But measuring that level has become more difficult because of structural changes and the uneven effects of the pandemic on the labor market.