Bank of Canada Governor swings from bleak outlook to wild optimism.
Three months ago tomorrow, the Bank of Canada cut interest rates and Governor Steven Poloz was warning about trouble. The oil shock will lead to an increase in unemployment, he said. He also saw 'significant' downside risks to Canadian inflation.
Six weeks ago, he was talking about an 'atrocious' first quarter.
Poloz's views are more changeable than his talking hands
Now, Poloz is downright giddy about the outlook. He expects a recovery in the current quarter and is global growth signs are unambiguously good for Canada (did he see that China cut rates by the most in years?)
He's especially excited about the US, despite a series of soft economic readings in the past month.
"The U.S. economy has great fundamentals," Poloz said during a talk Monday. "I think it's going to pop and we'll have performance there that is a lot stronger than everyone's expecting.... Our biggest risk I think today is the U.S. economy will prove to be quite a bit stronger than most of us our assuming."
I don't often say nice things about the Fed but Poloz might be wise to steer questions toward economic data and say the BOC will respond to the economy, rather than making bold predictions.
Note:
CAD watchers may want to keep a close eye on budget numbers due later today.
