Bank of Canada Governor Stephen Poloz during a press conference at the National Press Theatre, in Ottawa on April 24, 2019.Sean Kilpatrick/The Canadian Press
Bank of Canada Governor Stephen Poloz on Tuesday said that while the Canadian economy currently faced some headwinds, there was good reason to believe growth would accelerate in the second half of this year.
Poloz, speaking to the House of Commons finance committee, reiterated that he felt an accommodative policy on interest rates was still warranted.
Last week, the central bank made clear rate hikes were off the table for now, given the economy was struggling to cope with lower oil prices, weak household spending and the impact of global trade conflicts.
It also cut its estimate for annualized first-quarter growth to just 0.3 per cent.
“The Canadian economy is currently facing some headwinds, but there is good reason to believe that the economy will accelerate in the second half of this year,” said Poloz.
“We will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive. In particular, we are monitoring developments in household spending, oil markets and global trade policy.”
The Bank of Canada said it wants rates to eventually rise to its so-called neutral range, when monetary policy neither stimulates nor restrains growth.
Last week the bank revised down its estimate for the neutral range to 2.25 per cent to 3.25 per cent, from 2.5 per cent to 3.5 per cent, citing additional information and improved modelling.
Poloz told the committee that the move – which largely reflected global trends such as slowing labour force growth and lower productivity – should not be regarded as permanent.
“Only if we did have a long-lasting rise in productivity would there be pressure for it to rise up … that, of course, is quite possible,” he said.