"Many export sectors are operating near their capacity limits, which augurs well for future investment and job creation"
- Stephen Poloz, Bank of Canada Governor
Bank of Canada Governor Stephen Poloz delivered a cautiously optimistic view on the nation's economy, saying the Canadian economy is making progress in adjusting to low oil prices and recovering from the global financial crisis. While the energy industry continues to falter, there are signs of resilience in non-energy exports, even though the data have been volatile in recent months. Moreover, the past depreciation of the Canadian currency is shoring up exports, including tourism, the Governor added. Governor Poloz also added Canadian households are remaining resilient, particularly outside resource-producing areas. Low interest rates and a strong job market have helped sustain consumer spending.
The BoC will update its forecasts next month in its monetary policy report, a package of forecasts that Poloz suggested could shift once again depending on the outcome of the upcoming referendum on whether the UK will exit the European Union. The federal Liberals have warned that a vote by Britain in favour of Brexit would be a negative for the Canadian economy. Market watchers say the central bank is likely to be reluctant to hike interest rates even amid heightened risks associated with housing and elevated household debt levels until there is evidence a recovery from the commodity-price drops can be sustained.
© Dukascopy Bank SA