- Stephen Poloz, Bank of Canada Governor
Stephen Poloz, Bank of Canada Governor, admitted that the negative impact of the precipitous decline of oil prices on the Canadian economy will be short-lived and disappear in the second half of this year. The impact of falling oil prices hit the economy hard in the first quarter of the year, eroding national income by 3%. However, the emphasis will shift from lower oil prices to "positives" including more robust US demand for Canadian goods in the next few months. Poloz said the world's number one economy, which consumes about three quarters of Canadian exports, has "great fundamentals," and he had expected it would perform better than most analysts anticipated.
Earlier in the week he said there are signs the central bank's unexpected January interest rate cut and stronger US demand will help Canada's economy return to normal by the end of next year. Poloz said the January rate cut appears to have helped to put the nation's economy back. Poloz became the first Group of Seven central banker to ease monetary policy in response to the sharp decline in oil prices, slashing the key rate in January to 0.75%. Poloz called it "insurance" against the effect of the downturn. In a statement last week, Poloz suggested the worst of the oil shock may be over.
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