Bank of Canada governor Stephen Poloz has an optimistic outlook on the Canadian economy as a whole, but says some areas still need improvement.
Bank of Canada governor Stephen Poloz spoke optimistically about Canada’s economy on Wednesday (April 25), but his positivity came with the caveat of rising interest rates.
Poloz, who appeared before the Senate’s banking committee in Ottawa, spoke about how the economy is “finally positive” after having adjusted to a heavy oil price decline.
Canada is a major oil exporter, and its economy took a hit in 2014 when prices started to fall.
When one senator asked Poloz about the bank’s positivity in its April 18 interest rate announcement, referring to it as a “fairly rosy” outlook, he explained himself further.
“When we describe the economy, as you say, in rosy terms, it is, I would say, more like finally positive terms,” Poloz said.
In spite of that positivity, however, Poloz believes that some parts of the country’s economy needed further strengthening.
“For the economy as a whole, it has put the adjustments to the oil price shock behind us, but we still have softness in several areas of the country,” he added.
As the economy has been slowly improving, the Bank of Canada has hiked rates three times since July 2017. While the central bank chose to keep interest rates at 1.25 percent earlier this month, it is no secret that further hikes are coming, though they will be introduced gradually.
“Higher interest rates will be warranted over time, although some degree of monetary policy accommodation will likely still be needed to keep inflation on target,” Poloz said on Wednesday.
“The Bank will continue to monitor the economy’s sensitivity to interest rate movements and the evolution of economic capacity. In this context, Governing Council will remain cautious with respect to future policy adjustments, guided by incoming data,” he added.
The central bank’s next scheduled announcement will take place May 30.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.