Poloz speaks about global trade (he doesn't comment on outlook for domestic rates)
- Post-crisis global economy still faces severe headwinds
- Low interest rates are keeping headwinds at bay
- Trade slowdown should reverse as global economy recovers
- Pace of integration slower, trade at new balance point
- Troubling number of protectionist policies since the crisis
- About half of trade slowdown linked to lower investment
- If rates suddenly returned to 3-4%, a recession would occur
This is basically an academic speech but he makes some good points. Poloz says the most important reason behind the slowdown in trade growth is that big chances for increased international integration have largely been exploited already.
The best hope we have for more trade, he says, is the creation of new firms, chances for existing supply chains to be improved and for the invention of new technologies.
In the meantime, he's cautious about the fragility of the global economy and said central bankers need to take market anxiety and volatility seriously, whatever the source. That's basically a prescription to let markets dictate monetary policy.
