Business Outlook Survey out today will offer more clues on economy
Bank of Canada Governor Stephen Poloz indicated he’s all but abandoned any bias for higher interest rates, saying officials are simply focused on keeping policy aligned with current economic conditions.
“What matters is what forces are acting in the economy,” and what’s the level of interest rates that will bring the economy into balance, said Poloz, who was attending meetings of the International Monetary Fund. “That number is going to change every time something hits the economy, whether it’s a positive thing or a negative thing.”
‘Stimulative’ PolicyEstimates of how high rates will eventually need to go are simply theoretical, and the actual “neutral rate” is an unknown, said Poloz. Regardless, headwinds exist and require the policy rate to remain stimulative, he said.At the last rate decision on March 6, “we said pretty clearly, conditions warrant a rate of interest below neutral,” Poloz said . “So it’s obvious that we’re still working on some headwinds or things that are keeping the economy getting all the way home.
In Washington, Poloz did provide some insight into the Bank of Canada’s recent change in tone, saying it was a case of “confidence in the outlook eroding as we got a series of data points that were on the wrong side of things.”
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