Inflation Eats Up Three-Quarters of Wage Gains
In other words, even anemic inflation is eating up nearly three-quarters of wage increases. On average, Canadian workers have eked out only a 0.5% improvement in purchasing power over the past year.
Low inflation and the weak job market both argue for the Bank of Canada to keep interest rates low. The rationale to hike interest rates would be to quell inflation, which is already under control and well below the central bankâ€™s 2% target. The rationale for low interest rates is to accommodate investment financing and avoid upward pressure on the exchange rate.