In what appears as a mirror image of ECB chair Draghi’s comments last week a dovish Bank of Canada head Poloz said that Canada maybe able to handle more growth without inflation.
In what appears as a mirror image of ECB chair Draghi’s comments last week a dovish Bank of Canada head Poloz said that Canada maybe able to handle more growth without inflation.
Poloz also said that there is a degree of untapped potential in the Canadian economy. He said that the Labor market has become a good deal healthier over the past year but some slack still remains.
He expects that increased investment coupled with labor market churn will create more supply through higher productivity and employment. In a nod to previous broad statements he said that monetary policy remains particularly data dependant and with that the BOC cannot take a mechanical approach to policy, even though interest rates likely to move higher over time.
He said that you cannot know in advance how far the capacity-building process can go but you obliged to let it occur.
Poloz said he sees good reason to be optimistic about the Canadian economy, even with all the unknowns Wih a political tone he said “Women, youth and aboriginals are a source of untapped potential economic growth”.
In saying “Canada at ‘sweet spot’ of economic cycle where investment and capacity-building usually take over as an engine of growth” he again makes it clear to letting things develop. “A period of slow productivity growth is usually associated with slow rates of new company formation, we are-at long last-finally seeing some encouraging signs in these data.
That again tells us they will let the economy have a chance to build rather than stall out and stall any progress. All in a dovish talk and of promise for Canadian growth.
Source: Bank of Canada