Measuring changes to the labour market

Understanding slack helps us set monetary policy

The Bank’s goal is to support strong employment and output growth by keeping inflation low, stable and predictable. While inflation has risen above our 1 to 3 percent inflation control range in recent months due to transitory effects of rising energy prices and global supply constraints, medium-term inflation expectations have remained relatively well anchored.

By measuring the health of the labour market, the Bank can tell when:

• demand for goods and services is not balanced with what the economy supplies
• inflation pressures are rising or falling

The economy has made good progress toward recovery, but some excess capacity, or slack, remains. The better the Bank understands this issue, the better we are able to respond with policy that supports a full and inclusive recovery by bringing inflation sustainably back to the 2 percent target.