The bigger risk is falling inflation and even deflation. We are more concerned about the risk of deflation than the risk of inflation, for two reasons.
First of all, deflation is particularly harmful to an economy, particularly an economy with high levels of household indebtedness, because the real value of people's debts goes up and their ability to service those debts goes down. That's why I was saying they're more likely to become insolvent in that situation. Second, we're already in a position such that our policy rate is at the effective lower bound of 25 basis points. Interest rates across the yield curve are already very low, so there's only so much monetary stimulus space available. For both those reasons, you want to really guard against falling inflation, and particularly deflation.
We're starting to see the containment measures coming off across Canada. With that, supply is being reopened and we're starting to see people being called back to work. We're starting to see people make purchases.
We've lost roughly three million jobs. We have about 290,000 of those back, but we're still down 2.7 million jobs. Given that, you can expect that the purchasing power and the confidence of Canadians are going to be severely impacted. That is going to reduce demand more than supply, which will put downward pressure on inflation.
Our actions are really designed to bring inflation back to target, and the way to do that is to support employment and output growth.