The CEO of Canaccord Genuity Group said recent layoffs at his company and others are an unfortunate side-effect of tough economic conditions and higher interest rates – and a sign that the Bank of Canada has gone far enough in its monetary tightening cycle.

The financial services firm laid off about 75 people this week, or around seven per cent of its 1,200-strong Canadian workforce, mostly from its capital markets division.

Daniel Daviau told BNN Bloomberg in a Friday interview that while the job cuts at his company were “marginal,” it’s a tough necessary part of the broader market recovery he is “cautiously optimistic” is underway.

“There's some very good people who, unfortunately, we had to part ways with, but that really is just positioning the business for … a strong recovery,” Daviau said.

“You need to see job cuts, you need to see the economy pull back before interest rates can stop increasing, and therefore if interest rates stop increasing, the market can take off again.”

Daviau’s comments came as Statistics Canada’s latest jobs report showed a softening in the labour market. The country’s economy shed 6,400 jobs in July and unemployment rose to 5.5 per cent for a third straight monthly increase, according to the Friday figures.

Those numbers came after the Bank of Canada raised its key interest rate to five per cent last month, the highest level since 2001, in its continued efforts to cool the economy and bring down persistently high inflation.

Daviau pointed to other layoffs at Canadian companies like the 6,000 jobs cuts announced at Telus Friday as a sign that the Bank of Canada’s intended economic cooling is taking effect. In light of those developments, he argued further rate increases from the Bank of Canada are not necessary.

“They’re trying to create economic damage, they're trying to bring down inflation, and I understand that. But have they gone far enough now? Probably, when we're seeing job losses,” he said.

“I think they're seeing the desired effect.”

WHAT’S NEXT FOR THE COMPANY

A management-led plan to take Canaccord Genuity private was abandoned in June, with executives saying regulatory approvals were not met in time.

Daviau, who had been one of the leaders of the proposal, said the development was disappointing but the company is pressing on with no difference in management style.

“Nothing's really changed. We were disappointed that the privatization didn't go (through), but unfortunately, when you're regulated in 13 different jurisdictions and one of them puts up their hand and delays you, there was a risk of that,” he said.

“We're not going to lose sleep over it. We're going to drive on and create value for all our shareholders.”

With files from Bloomberg News.