- Stephen Poloz, Bank of Canada Governor
The Bank of Canada Governor Stephen Poloz stressed that the central bank's interest rate policy will remain independent of the future Fed actions. Poloz said that the BoC has room to keep interest rates near historic lows even if employment starts to improve. Poloz said persistent slack in the country's labour market and a tendency toward creation of part-time job has limited income growth in the country. Canada's central bank long has insisted its policy decisions are not directly impacted by the Fed's actions, but market participants have always been sceptical. Monetary policy in the two countries is similar due to their close trade links: when the U.S. economy expands, Canada sells more exports, which bolsters economic growth and puts upward pressure on inflation. Before the crisis, the "equilibrium rate" was considered to be about 4%. The central bank now believes scars from the crisis have lowered that rate. Meanwhile, in July Canada's central bank has kept rates on hold at 1% since 2010, referring to sluggish global outlook and weak domestic outlook, and is widely expected to keep them there when it releases its next policy statement on September 3.
Poloz also told that investors, who think he favours a weaker Canadian Dollar, are mistaken, and it is to be expected that the nation's currency would weaken at a time when the U.S. economy is gathering momentum.
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