Bank of Canada Governor Teff McClem said there is room to slow the economy based on an “exceptionally large number” of job openings.

In an interview broadcast on CBC Radio Sunday, McClem said the current inflation battle is the biggest test the central bank has faced since it began pushing for inflation 30 years ago.

But he assured Canadians that monetary policy was working and expected inflation to return to the central bank’s 2% target by 2024. Canada’s inflation rate fell to 7.0% in August and core inflation is around 5%.

“We need to calm the economy, but we don’t want to calm the economy too much,” McClem said.

“If we look at the economy at the moment, there is an exceptionally high number of jobs … and this is a clear indication that there is room to slow down the economy without a lot of people out of work,” he added. .

Data released Friday showed that Canadian employers were actively looking for jobs in July, while the vacancy rate fell to 5.4% in July, from a peak of 6.0% in April 2022.

The Bank of Canada has raised its benchmark interest rate by 300 basis points since March, one of the strongest and fastest tightening cycles ever. Economists and money markets are leaning towards a 50 basis point lift on October 26.

McClem said parts of the economy sensitive to higher interest rates are starting to slow.

“Let me be clear: What we don’t want is wages and inflation to break away from our 2% target, because if that happens, we’ll have to slow the economy a lot to bring inflation back to 2%. That’s what we call a rate hike.” (Reporting by Denny Thomas in Toronto, Editing by Matthew Lewis)