As we use higher interest rates to cool inflation, we’ll be watching very closely for signs that the economy and the labour market are responding. One way to explore the needed adjustment in our labour market is through the lens of what economists call the Beveridge curve. This curve depicts the typically inverse relationship between job vacancies and unemployment (Chart 3).
Chart 3: Cooling labour demand is associated with some increase in unemployment Quarterly, seasonally adjusted, dotted line denotes evolution over time Vacancy rate (% of labour force) 6  5  2022Q3  4  3  2  1  0 4  5  6  7  8  9  10  11  12  13  14  Unemployment rate (%) Fitted curve (2011–19 sample)  Observed values  Note: Job vacancies for 2022Q3 are based on the average of July and August from the Job Vacancy and Wage Survey.