Poloz hints that policy will stay looser or rates will be cut
Bank of Canada Governor Stephen Poloz again hinted he was disappointed in the economy and the outlook for growth on Tuesday.
"It is quite evident that our economy is still facing strong headwinds, and we need stimulative monetary policy to counteract them and move us closer to full capacity," he said.
He leaned on the government to boost infrastructure spending and maintain open borders. He said a combination of freer trade and more infrastructure spending could boost Canada'sGDP by 3 to 5% a year over the next decade.
"We all need to encourage [trade liberalization], both within Canada and internationally, since the world seems to be entering a phase of doubt about the benefits of international trade," he said. "We know from history that sliding into protectionism would be highly counterproductive."
Other highlights:
- Potential output growth at 'uninspiring 1.5%'
- Real neutral rate is currently 0.75% to 1.75%
- Nominal neutral rate is 2.75% to 3.75%
- Economy still facing strong headwinds
The title of the speech was 'Living with Lower for Longer'. Read it here.
The crux of it is this: "Some of the forces leading to low interest rates will persist for a long time, so we need to prepare for lower for longer."
