Interest rate rise reaffirmed

The Bank of Canada’s second in command is continuing to suggest that interest rates will rise over the medium term, even as economists say turmoil in Europe and a weak recovery in the U.S. are taking their toll on Canada.

OTTAWA — The Bank of Canada’s second in command is continuing to suggest that interest rates will rise over the medium term, even as economists say turmoil in Europe and a weak recovery in the U.S. are taking their toll on Canada.

In a speech in Winnipeg, deputy governor Tiff Macklem repeated Thursday an earlier statement by the central bank. Notes on the speech were released in Ottawa.

“To the extent that the economic expansion continues and the excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the two per cent inflation target over the medium term,” Macklem said.

“The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.”

Last month, TD Bank estimated growth in the third quarter could drop to as low as one per cent, from 1.8 in the first two quarters of the year. The downgrade came amid an environment of a weak global economy, record household debt in Canada and governments set to reduce spending in an effort to balance their budgets.

However, despite the statement by Macklem on Thursday and other recent comments by Bank of Canada governor Mark Carney, economists suggest the likelihood of the central bank actually hiking rates in the near future is near zero. The Bank of Canada’s key policy rate has been set at one per cent for more than two years.

In his speech, Macklem said that while the challenge of the last five years has been to create good jobs, the challenge of the next five will be finding good workers.

He said businesses are already reporting difficulties in finding the right worker for vacancies, even though he concedes the relatively high 7.3 per cent unemployment rate suggests that there are still many Canadians looking for work.

With the economy expected to keep expanding and baby boomers moving into retirement, he says the issue will become more acute in the next few years. “We are getting older, living longer and having few children. That means more workers retiring and fewer people to replace them,” Macklem said.

He said efforts must be made to increase the participation of Canada’s indigenous peoples, noting the Aboriginal population is growing faster and tends to be younger than the Canadian average.

Immigration is also critical for growth of the labour force, Macklem said.

Macklem said overall, Canada’s labour market has vastly improved since the 1970s and partly credits an extended period of low, stable and predictable inflation for creating conditions of confidence in the economy.

He also took pains to burst some myths that he says have circulated about Canada’s relatively strong job creation record since the 2008-09 recession.

While it’s true that few of the 770,000 new jobs created since the recession have been in the manufacturing sector, it is a myth that most are low-paying service jobs, he said.

About 90 per cent of the new jobs pay above-average wages in fields such as construction, utilities and health-care and in professional, scientific and technical services.

Just Posted

Willie Littlechild grateful for life in sports

the 74-year-old was inducted into the Canada Sports Hall of Fame on Thursday

Updated: Hunting Hills High School student sentenced for making online threat

16-year-old gets a conditional discharge with 12-month probation and 50 hours of community service

Butcher stabbed Johnston in self-defence, lawyer says in closing argument

HALIFAX — Nicholas Butcher was acting in self-defence when he stabbed Kristin… Continue reading

Federal government finalizes regulations to reduce methane emissions

CALGARY — The federal government said Thursday it has finalized regulations that… Continue reading

Man charged with sex offences aiming to resolve charges

Stuart Peter Hunt is facing more than dozen charges related to child sexual exploitation offences

WATCH: Thousands of high school students visit Red Deer College for CAREERexpo

The eighth annual CAREERexpo was held at RDC Thursday

High school students show off their skills at Red Deer College

Central Alberta students competed in the Skills Canada Alberta competition at RDC Thursday

Grief over deadly Toronto van attack sinks in days after rampage

TORONTO — Grief over the deadly van attack that took place on… Continue reading

Riggers looking forward to another trip to Nationals with season on the horizon

Season opens on May 15 against the Confederation Park Cubs

Update: Pilot likely disoriented in plane crash that killed former Alberta premier

CALGARY — The Transportation Safety Board says the pilot of a plane… Continue reading

What’s new on Netflix Canada, CraveTV in May

A monthly look at what’s scheduled to be added to the catalogues… Continue reading

Air Canada offers to help passengers stranded by a possible pilot strike

MONTREAL — Air Canada has turned the tables on WestJet by taking… Continue reading

Blackfalds drops front licence plate advocacy efforts

The Town of Blackfalds is no longer pursuing mandatory dual licence plates… Continue reading

How the government hopes to strengthen intellectual property in Canada

OTTAWA — The federal government has unveiled new measures on intellectual property… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month