2/2 © Reuters. FILE PHOTO: Bank of Canada Governor Tiff Macklem walks past the Bank of Canada building in Ottawa 2/2
By Julie Gordon and David Ljunggren OTTAWA (Reuters) – Canada’s economy will see a solid and sustained rebound this year as vaccines ramp up, Bank of Canada Governor Tiff Macklem said on Tuesday, warning that the market Canadian real estate is beginning to show signs of “excess exuberance”. Macklem, speaking to an Alberta business audience, said that as more Canadians are vaccinated, the worst-hit segments of the economy will be able to start resuming operations, resulting in strong job growth. “Clearly getting vaccines to Canada and Canadians is the top priority,” he said. “The sooner we achieve generalized immunity and can return to more normal activities, the stronger and more sustained recovery will be.” He previously said the vaccines “promise a more sustained recovery” after the second wave of COVID-19 infections. Responding to a question from the audience on housing, Macklem noted a fundamental shift in buyers’ needs during the pandemic, but also said for the first time that the central bank is beginning to see signs of foam in the hot housing market. “When we see extrapolative expectations, when we see that people start buying houses solely because they think prices are going to go up, that’s a warning sign for us. We are beginning to see some early signs of excess exuberance,” he said. . He later told reporters that the Bank still does not see the need for new measures to slow the market. In his speech, Macklem said it would be “some time” before Canada saw a full recovery, noting that the pandemic had accelerated a trend toward automation, with many low-wage jobs at high risk of being affected. He also pointed to a “probably permanent” trend toward e-commerce, predicting that the economy could need “significantly fewer” retail workers. “We will not go back to the same economy that we had before the pandemic. Even as it recovers, the economy is adapting to structural changes and some workers will have to switch to jobs in faster growing sectors,” he said. Macklem reiterated that interest rates would remain at their effective lower limit until economic slack is fully absorbed, which the bank says should occur in 2023. The loonie stabilized at around 1.2595 per US dollar, or 79.40 cents, after the speech, about a three-year high.