(Montreal) Inflation is at its highest level in several decades, but the situation is different from that of the 1970s, when inflation was combined with high levels of unemployment and slow or negative economic growth, underlined a Deputy Governor of the Bank of Canada on Thursday.

In the text of a speech delivered in Montreal to the Association of Quebec Economists, Toni Gravelle noted that a “storm of factors” had helped drive inflation as the strength of the economic recovery, disruptions in the supply chain and the Russian invasion of Ukraine have combined to drive up prices.

According to Gravelle, the bank expected inflation to average nearly 6.0% in the first half of the year, but with the March reading coming in higher than it had expected, it will probably revise its forecasts.

However, Gravelle notes that the economy is “running full steam” as quarter-over-quarter growth in the economy in the second half of last year averaged 6 % on an annualized basis.

The deputy governor also pointed to the unemployment rate of 5.2%, while its average was around 8.0% from 1976 to 1982.

The Bank of Canada last month raised its key interest rate by half a percentage point to 1.0% in a bid to help curb inflation. The central bank also warned that more hikes were to come.



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