Central Bank of Canada (BOC) Governor Tiff Macklem said global supply chain disruptions are likely to continue longer than expected, meaning inflation in Canada and other developed countries may take time to recede.
According to Macklem, this problem will weigh on the prospects of Canada’s economic recovery in the short term. This means the recorded recovery may not be as quick as expected as the central bank forecast in July.
The problem of global supply chain disruptions has led to high raw material prices and manufacturing costs causing most product manufacturers to reduce or stop their production.
Adds Macklem further, global chain disruptions are largely temporary in nature but there is a risk that some elements will persist that will have a permanent impact on supply.
However, Macklem is seen as less concerned with rising inflation, saying the reasons for rising prices in Canada are quite small.
So far also the central bank has seen no evidence of continued inflation despite a slight increase in wage growth, but it is not a major factor to inflation.
With the recovery expected to slow, the BOC is likely to continue to maintain current stimulus measures such as the Australian Central Bank (RBA).
