06:53 AM EDT, 10/18/2024 (MT Newswires) -- September's Canadian inflation data further confirms that inflation is under control in the country, noted National Bank of Canada.

However, this didn't happen by magic, said the bank. Economic growth has been below potential gross domestic product since 2022, and preliminary Q3 data indicate that this is still the case.

A corollary is that the labor market shows no sign of stabilizing, as evidenced by the continuing decline in the employment rate, particularly among the 25 to 54 age group.

The outlook for the job market remains "gloomy," stated National Bank. Job vacancies in the private sector are melting away. Hiring intentions remain woefully inadequate in the face of staggering population growth.

Business start-ups are also sluggish, reflecting a business climate undermined by overly restrictive monetary policy.

The Bank of Canada has used a "sledgehammer" and it has worked to curb inflation, but it's high time to put it away because undesirable collateral damage could occur, according to National Bank. Given the economic situation, monetary policy seems to the bank to be far too restrictive in real terms and it believes that the central bank should step up the pace to make monetary policy neutral as soon as possible.

National Bank anticipates economic growth of just 1.0% this year and 1.3% in 2025, which would translate into an unemployment rate of between 7.0% and 7.5% by mid-2025.