- Stephen Poloz, BoC Governor
Stephen Poloz, Bank of Canada Governor, said the Canadian economy is headed in the right direction, and sustained recovery supported by non-energy exports should start by midyear, underlying that the rebound from the 2008-09 recession "has been a long voyage, and it isn't over yet." However, Poloz reiterated that uneven economic performance of Canada's top trading partner, the US, is clouding the nation's economic growth outlook. Another uncertainty is whether the negative fallout from the precipitous drop in oil prices has dissipated. Given oil is Canada's top export, further oil-related weakness would affect the BoC's call for a partial bounce back in growth in the second quarter, Poloz said. The central bank's January's interest rate cut from 1.0% to 0.75% is seen working, as positive economic momentum continues to build. The Bank of Canada is scheduled to deliver its next rate decision on May 27, and analysts increasingly expect the central bank to leave rates on hold. Given the domestic economy is struggling to maintain sustainable growth, along with the US showing surprising weakness, and the Fed's anticipated return to rate hikes this autumn appearing less likely, Canadian policy makers might find themselves with no option but to proceed with lower borrowing levels for longer. The BoC continues to monitor how businesses and consumers are responding to recent strength in both crude oil prices and the Canadian Dollar, as well as other developments in financial markets.
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