BoC Poloz: Uncertain Canada Economic outlook justifies rate change

Uncertain Canada Economic outlook is putting pressure on Canadian policymakers, as they are about to make a rate decision at their next meeting. Will the incoming data impact BoC’s rate decision?

29 November, AtoZForex – Stephen Poloz, the Governor of the Bank of Canada (BoC) suggested that uncertainty around Canada Economic outlook continues. This, in turn, has set the bar high for interest rate change, with the BoC approaching its next week’s meeting.

Uncertain Canada Economic outlook

The Bank of Canada will decide on the interest rate on its next meeting. Mr. Poloz said the wide range of uncertainties the bank outlined in October’s rate decision is still present. Moreover, Mr. Poloz has added:

“The situation hasn’t changed much, as far as I can see.”

He added that the bank opted to wait until more clarity on issues such as the US elections. Also, the bank holds the line until the pace of Canadian trade, the impact of Canadian infrastructure spending and evolution of housing market are clear.

Moreover, Poloz clarified in a press conference that the bank is not looking for “one big event” to shift it from its wait-and-see attitude on rates. But, it is rather waiting for more evidence on several economic overlooks that would clarify the big picture. He stated:

“It’s more an accumulation of evidence.”

What can influence BoC’s rate decision? 

According to Poloz, new data is coming between this moment and next week’s BoC rate decision. He specified Wednesday’s third-quarter gross domestic product report. He believes this would provide the bank with some important additional indicators for Canada’s economy.

Furthermore, he said that Donald Trump’s victory slightly cleared up the uncertainties around Canada Economic outlook. He added that they hardly had any additional economic data since the US elections.

Canadian economy is gradually rising 

In addition, Mr. Poloz believes that the bank’s service sector expansion is leading to a full economic recovery and return to sustained growth. Also, he has estimated the gap left in the economy from the declines in manufacturing and resources amounts to a range of $80 to $90 billion. He further stated that it is equivalent to over 4 percent of the gross domestic product, but still, the gap is being refilled.

Additionally, Mr. Poloz said that the recovery is happening gradually. Still, he said they have confidence that the economy will fully recover to a full output. Furthermore, Stephen Poloz added that the bank has dedicated a special sector in its quarterly Monetary Policy Report in October to services’ role in the current economic recovery.

Reportedly, as Uncertain Canada Economic outlook is pressuring BoC policymakers, some speculations exist that the bank will consider an interest rate cut to help Canada’s struggling economy.

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