OTTAWA — The governor of the Bank of Canada says the country won’t fully heal from the economic wounds of COVID-19 until it addresses the uneven impact the pandemic has had on certain sectors and workers.
TIff Macklem says creating an inclusive economic recovery may not just get the country back to where it was pre-pandemic, but maybe bring it to a better place for all.
To do that, he suggests companies focus on hiring those hardest hit through the pandemic like women, Indigenous people, racialized Canadians and people living with a disability.
Macklem says in a speech today that drawing those workers into the labour market can help companies make better decisions and boost the economy’s potential output through a cycle of more income followed by demand for goods and services.
But he also says in the speech to universities in Atlantic Canada that the central bank has to do its part as well, noting the need to improve diversity at the senior ranks of the organization.
Macklem adds the central bank will take a look at its bond-buying programs and drop to its key policy rate to see if they have created inequalities across the country.
The Bank of Canada’s bond-buying spree to snap up government debt has most recently been aimed at driving down interest rates charged on things like mortgages and business loans to prod spending.
Macklem says the quantitative easing program can boost wealth by boosting the value of assets held in registered retirement savings plans or company pension plans, which not everyone has equal access to.
The bank will study impacts at home and abroad to get a better understanding of how its actions impacted income and wealth inequality, Macklem says.
“What we can and must do is keep the benefits of inclusion in mind while implementing monetary policy,” he says in the text of his speech.
“This idea is not new, but the very unequal impacts of the pandemic are making action more urgent than ever.”
It was just over one year ago that Macklem was named the next governor of the Bank of Canada as the central bank was taking unprecedented policy actions to aid the economy.
Its key policy rate was lowered to 0.25 per cent, where Macklem says it will stay until the economy is fully recovered and inflation is back at the bank’s two per cent target zone.
The bank recently scaled back federal bond purchases and is winding down other purchasing facilities now that economic conditions are improving.
But Macklem says the rising tide has not lifted all boats.
He pointed to high-contact service sectors like retail and restaurants whose output is almost 20 per cent below pre-pandemic levels, just as the combined output of the rest of the economy is slightly above pre-pandemic levels.
“The pandemic makes fostering an inclusive economy more important than ever. We won’t fully heal the economy until we address these unequal impacts,” Macklem says.
“And rather than just trying to recover to where we were before the pandemic, maybe we can bring the economy to a better place for everyone.”
This report by The Canadian Press was first published May 13, 2021.
The Canadian Press