Firms have been increasing their numbers of employees, as the adjustment in excessive holdings of labor has progressed. Initially, they relied mainly on part-time workers in order to restrain labor costs, but firms have begun to gradually increase their numbers of regular employees, as the labor market has tightened. Wages per worker have also been rising, reflecting such conditions in the labor market.
As today’s decision to keep our key policy interest rate unchanged illustrates, we are decidedly data dependent and will adapt our inflation outlook and interest rate profile to developments as they unfold. The appropriate pace of rate increases will depend on how the outlook evolves, with a particular focus on developments in oil markets, the Canadian housing market and global trade policy.