OTTAWA, Feb 16 (Reuters) – Bank of Canada Governor Tiff Macklem said on Thursday that the economy remains overheated and the jobs market too tight, as he kept the door open to higher interest rates.
On Jan. 25, the Bank hiked its key interest rate to 4.5%, the highest level in 15 years, and became the first major central bank to say it would hold off on further increases as long as prices eased as forecast.
The bank forecasts inflation to slow to about 3% by the middle of the year from 6.3% in December, and to come down to its 2% next year.
Macklem reiterated the bank’s policy stance, but acknowledged the impact of last week’s strong January jobs report.
“The labor market is just too tight. It does need to get better balanced,” Macklem said during testimony to the House of Commons finance committee.
Canada added a massive 150,000 jobs in January, ten times expectations.
The bank last month forecast the economy would stall and could tip…
