BoC's Vincent: Structural changes in labor markets make BoC's job more complicated

Eren Sengezer FXStreet

Bank of Canada (BOC) Deputy Governor Nicolas Vincent said on Tuesday the more the economy faces shocks accompanied by structural changes, the less clear-cut the monetary policy decisions will be, per Reuters.

Key takeaways

"Structural changes in labor markets are making the Bank of Canada's job more complicated."

"One of our main challenges is accurately distinguishing structural changes from cyclical fluctuations."

"Monetary policy cannot compensate for lower supply caused by trade friction or population aging."

"Main labor trends in Canada are low turnover, rising long-term unemployment and persistently high youth unemployment."

"Current conditions point to mild excess supply in Canadian labor market, which is less dynamic than it was before."

"If we stimulate demand when issue is more structural, we could create inflationary prssures while delaying necessary restructuring."

"We are exploring more granular data to better understand what's happening in job."

Market reaction

These comments don't seem to be having a noticeable impact on the Canadian Dollar's performance. At the time of press, USD/CAD was up 0.1% on the day at 1.3817.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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