BOC highlights labor market rigidities and aging demographics as key hurdles, limiting effectiveness of rate cuts amid inflation risks.
Bank of Canada officials signaled growing uncertainty in monetary policy decisions due to structural economic shifts. Persistent labor market challenges, including low turnover and high youth unemployment, complicate efforts to distinguish cyclical trends from long-term changes.
The central bank noted mild excess labor supply but warned that demand-side stimulus could fuel inflation if structural issues like trade friction and aging demographics persist. Granular labor data is being explored to refine policy responses.
Comments leaned hawkish, emphasizing inflation risks over weak demand. Officials stressed that monetary policy cannot resolve supply-side constraints, suggesting caution on aggressive easing.