- Stephen Poloz, Bank of Canada Governor
Bank of Canada Governor Stephen Poloz highlighted that divergence has become the dominant topic across the globe. While the Fed has just begun monetary policy normalization after seven years of keeping its fed funds rate near zero, other banks cut rates in the past year, including the recent ECB's move of lowering its deposit rate. Poloz believes that the theme of divergence is likely to remain for some time. The Governor ensured that the BoC would continue to conduct an independent monetary policy in response to Canada's own economic developments in order to achieve the 2% inflation target. The central bank has a number of tool at its disposal, both conventional and unconventional, to combat threats to the inflation target or to Canada's financial system.
Poloz added that movements in exchange rates are helping Canada's economy. The depreciation of Canada's Dollar partly offsets the decline in commodity prices, which are usually priced in US dollars, as well as boosts Canadian-dollar revenues for exporters. There has been a stronger growth in exports of non-commodity goods, which is helping to offset the weakness in the resource sector tied to lower commodity prices. However, this process requires some time to translate into more investment spending and new job creation.
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