OTTAWA (Reuters) – Low-income Canadians will be disproportionately affected by the slowdown in economic activity needed to ease inflationary pressures, Bank of Canada Governor Tiff Maclean said on Monday.
In his opening remarks at the Fourth Annual Conference on Economic, Financial and Central Bank Diversity, Equity and Inclusion, Maclean also reiterated that inflation is too high, and as central banks work to reduce inflation levels, Challenges remain
The Bank of Canada has raised its policy rate 350 basis points to 3.75% since March, in This is one of the harshest tightening policies it has ever undertaken, and late last month it predicted Canada’s economy would stagnate in the 2023 first half of the year.
“A slowdown in economic growth will disproportionately affect our most vulnerable households,” he said. “High inflation and high inflation-fighting interest rates are placing an additional burden on our lowest-income households.”
Canada’s inflation rate has fallen from a recent peak of 8.1% to 6.9%, but still That’s a far cry from the central bank’s 2% target. Analysts polled by Reuters forecast inflation to remain at 6.9 percent in October. Data is scheduled to be released on Wednesday.
Macklem pointed out that while everyone feels the pressure of high inflation, the burden is heavier on low-income households because they spend most of their income On necessities, with less financial buffers.
“Unfortunately, it will not be easy to restore price stability,” he said. “But once we rebalance demand and supply, growth will pick up, our economy will grow solidly, and the benefits of low and predictable inflation will return.”