Mass immigration to Canada will keep a lid on inflationary pressures in the long run, but has also strained housing markets and helped to drive rent inflation to a 40-year high, says a Bank of Canada official.

Deputy Governor Toni Gravelle said a record-high influx of newcomers has added workers to tight labor markets and significantly improved the country’s potential growth. But after immigration began ramping up in 2015, Canada’s vacancy rate for homes available to rent or buy started to fall, he said.