The central bank, which blindsided markets last month by lowering its trend-setting rate, is also prepared to take further action to help a wobbly economic recovery that was recently jarred by falling oil prices, senior deputy governor Carolyn Wilkins said.
Wilkins made the remarks as many experts predict the bank could once again cut its key rate in March.
"If potential output growth turns out to be lower than we think, we have the tools to bring inflation back to target," Wilkins told the Ottawa Economics Association in a speech titled, "Minding the Labour Gap."
Her speech dealt with the importance of exploring job-market data, which she said showed the economy was about 270,000 jobs short of its full capacity at the end of 2014.
She highlighted several areas of concern, including how the average number of hours worked has remained low and that more than one in four part-time workers would prefer full-time jobs.
Wilkins also said the labour-force participation rate of the country's "prime-age" workers, between 25 and 54 years old, fell "substantially" last year.
"That's the core of our labour market," said Wilkins.
She also noted the average duration for unemployed people was about 21 weeks, near its peak at the Great Recession in 2008-09.
"That's close to half a year and it's a long time to be unemployed," she said.
The prolonged period of unemployment can erode a job-seeker's skills and may even lead them to drop out of the labour force, she added.
Last week, the latest labour-market survey found the unemployment rate dipped to 6.6 per cent in January with the addition of 35,400 net new jobs.
However, the Statistics Canada data showed the economy lost 11,800 full-time jobs and added 47,200 less-desirable, part-time positions.
Wilkins said closer scrutiny of the job market allows the central bank to measure underlying pressure on inflation and helps keep it from inadvertently stifling a healing economy through policy decisions. The Bank of Canada can adjust the key interest rate to help inflation stick close to its ideal two-per-cent target. The annual inflation rate was 1.5 per cent in December.
"Setting the right monetary policy conditions, within the context of our inflation targeting regime, is the best thing that we can do for the labour market," she said.
Last month, the Bank of Canada surprised observers and shocked markets by dropping its overnight rate to 0.75 per cent from one per cent.
At the time, governor Stephen Poloz said the cut was needed as insurance for the "unambiguously negative" effects of plummeting crude prices on the oil-exporting country's economy.
The bank predicted the pace of economic growth — measured by the real gross domestic product — to slow to roughly 1.5 per cent in the first half of the year. It expects the economy to build momentum in the second half of 2015 to help finish the year with an average real GDP growth of 2.1 per cent.
Wilkins expressed optimism Tuesday that the Canadian recovery would keep moving ahead with help from the lower dollar, stronger U.S. economy and the central bank's monetary policy response. She predicted Canada's non-energy exporters to lead the way.
"We'll get there and it will be a very good thing for Canada."
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