Last month, Bank of Canada Governor told Canadian Federation of Independent Business that inflation was going to be a problem for a while.
Back last month, Bank of Canada Governor Tiff Macklem told the Canadian Federation of Independent Business that high inflation was going to be a problem for a while – a few months at least – but the country’s small businesses could do their part to bring inflation down by not negotiating wage hikes into contracts for their employees.Start your day with a roundup of B.C.-focused news and opinion delivered straight to your inbox at 7 a.m., Monday to Friday.
Holding wages down should help bring inflation under control, whereas giving workers pay raises would give them more money to chase goods and services with, theoretically driving up prices.Article content Higher wages will also drive up inflation if businesses then pass the costs of those pay increases on to their customers in the form of higher prices.tap here to see other videos from our teamBut it’s really easy for a central banker to tell small business owners what to do. He isn’t competing for scarce workers or trying to entice labourers to come back to work after the federal government paid them handsome subsidies to stay off work during the pandemic.
In the real world, living up to Macklem’s theoretical advice would be tough – and something Macklem himself doesn’t have to follow. Indeed, Macklem’s advice to entrepreneurs came just one day after the Bank of Canada itself raised the prime lending rate by a full percentage point.
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