Bank of Canada Governor warns of overheated economy and tight labour market

Bank of Canada Governor Tiff Macklem has said the Canadian economy remains overheated and the labor market too tight, as he once again opened the door to higher interest rates. He also warned that more interest rate hikes would be needed if the labor market remains tight and service price inflation does not cool. The bank hiked its key interest rate to 4.5% on Jan. 25, the highest level in 15 years, and the bank is now predicting that inflation will slow down to 3% by the middle of the year, down from 6.3% in December.