Canada facing 'stagflation' risk: former Bank of Canada official

As the Bank of Canada hints that interest rates may stay at five per cent for some time, a former deputy governor at the central bank says the country’s economy now risks "stagflation."

On Wednesday, the Bank of Canada held interest rates at five per cent. It kept the door open to further hikes in the future, while reiterating that “supply and demand in the economy are now approaching balance.”

Paul Beaudry, deputy governor at the Bank of Canada from 2019 until July of this year, said Canada should be concerned about stagflation, which occurs when an economy faces slow growth, high unemployment and high prices.

“I think we're in that risk right now,” he said.