The Governor of the Bank of Canada lobbied for COVID-19 vaccines to be shipped to developing nations as part of a broader push not only to end the pandemic, but also to aid Canada’s economic recovery and alleviate the pressures on the prices of consumer goods.
In a speech Thursday, Tiff Macklem said the shooting is saving lives and livelihoods and underpinning the global economic recovery.
While vaccine development highlighted international cooperation at its finest, Macklem suggested that the same cannot be said for ensuring equitable access of vaccines to countries, especially developing countries.
COVID-19 is the greatest health and economic risk facing the world, and governments and the private sector must work together to make vaccines available to all, Macklem said in a speech to the US-based Council on Foreign Relations. .
Nationwide, tens of millions of doses and injections have been administered over the past year to the point where more than 82 percent of eligible Canadians over the age of 12 are now fully vaccinated.
But the same cannot be said for other parts of the world, particularly emerging economies, and regions of the world that Canada depends on for goods.
Ongoing outbreaks in other parts of the world affect supply chains, which in turn affects inventories of consumer goods in demand, the delivery of parts needed to build things here, like cars, and increases transportation costs.
All of this raises consumer prices in general.
“It feels like we are coming out of the pandemic, but it is important to remember that much of the rest of the world is still struggling tremendously against the pandemic,” said Deloitte Canada chief economist Craig Alexander.
“Part of the inflation story that is unfolding right now where inflation has picked up, part of that is actually a reflection of the ongoing pandemic outside of Canada.”
Annual inflation rates have been above the Bank of Canada’s comfort zone since April, reaching 4.1 percent in August. The central bank expects elevated readings above its target zone of about two percent for the rest of the year.
Pushing to ship vaccines to developing nations is a global economic victory: BoC chief. # Covid19vaccine #EconomicRecovery # COVID19 #Economy
Macklem said inflationary pressures should ease as prices no longer compare to lows early in the pandemic, and as trade bottlenecks resolve themselves. The bottlenecks are proving to be more persistent than previously thought and could similarly lead to higher inflation readings, he said.
“This pandemic keeps throwing new curveballs,” he told reporters after the event.
“It may take a little longer, but we continue to believe that there are good reasons why the impact of these supply disruptions on inflation should be temporary, and there are good reasons to believe that the economy, the recovery, will pick up and continue.” . . “
Still, he said the central bank is closely watching for signs that temporary factors are becoming more permanent, noting that “our margin of error on inflation is diminishing.”
Macklem also said that discussions about how to work on these global issues should come up when he travels to Washington, DC next week as part of his first international trip since taking the helm of the Bank of Canada at the start of the pandemic.
He is expected to attend the annual meetings of the International Monetary Fund and the World Bank, as well as meetings with his G7 and G20 counterparts.
In his speech, Macklem spoke about the need for countries to chart a path out of the pandemic that balances short-term needs with long-term goals, such as the transition to net zero economies.
Finding that balance is even more crucial as central banks prepare to cut stimulus programs and likely put further pressure on the global financial system, he said.
The Bank of Canada has already begun rolling back one of its key stimulus programs launched at the start of the pandemic by rolling back its weekly purchases of federal bonds.
The program, known as quantitative easing, is designed to encourage low interest rates on things like mortgages and business loans, but it could soon move into a phase where it no longer adds stimulus, but just keeps what’s there.
Similarly, the central bank’s key policy rate has remained at 0.25 percent since the start of the pandemic, which is as low as the bank says it will go, and where it should remain until the second half of next year when the Bank of Canada hopes the economy has recovered enough to handle higher interest rates.
This Canadian Press report was first published on October 7, 2021.