BoC Governor Tiff Macklem said in a speech, “to restore price stability, we need to rebalance demand and supply in the labour market to relieve price pressures.
“Monetary policy affects demand. By raising interest rates, we are moderating spending, and that will reduce the demand for workers,” he said.
“The other way to rebalance supply and demand is to increase the supply of workers. That takes time, and with inflation already far too high and with elevated risks that high inflation becomes entrenched, increasing labour supply is not an alternative to slowing demand.”