Bank of Canada says immigration curbs long-term inflation
BNN Bloomberg
Mass immigration to Canada will keep a lid on inflationary pressures in the long run, but has also strained housing markets and helped to drive rent inflation to a 40-year high, says a Bank of Canada official.
Deputy Governor Toni Gravelle said a record-high influx of newcomers has added workers to tight labour markets and significantly improved the country’s potential growth. But after immigration began ramping up in 2015, Canada’s vacancy rate for homes available to rent or buy started to fall, he said.
“Then, when newcomer arrivals picked up sharply in early 2022, that steady decline in the vacancy rate became a cliff,” he said in prepared remarks on Thursday in Windsor, Ont. “Canada’s vacancy rate has now reached a historical low.”
Gravelle delivered the speech focused on housing and immigration a day after the Bank of Canada left the benchmark overnight rate unchanged at five per cent. His remarks shed little new light on policymakers’ decision to pause, which was widely expected by markets and economists in a Bloomberg survey.
