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20 May 2015
January’s rate cut is aiding Canada’s recovery – BoC Poloz
FXStreet (Mumbai) - Lower oil prices and a slowdown in the US economy have made the Canadian recovery more challenging, but growth is still expected to pick up in Q2, Bank of Canada (BoC) Governor Stephen Poloz told the Greater Charlottetown Area Chamber of Commerce on Tuesday, adding that January’s rate cut is benefiting both consumers and companies.
Poloz noted, "While there’s still a risk that lower oil prices could have a greater impact, the signs we have seen to date lead us to believe that the impact of the shock is proving to be faster than we first expected, but not larger.
Poloz added that the bank will be renewing its inflation targeting agreement with the government next year. One of the areas being re-examined is whether the BoC should continue to use the core inflation measure as "the main guide."
Adding that BOC rate cut is having positive impacts, "Bank staff estimate that a household that has renewed a $100,000 mortgage would save about $250 in interest payments this year … But the really big impact is for companies with existing exports contracts in US dollars, which would see a bump in cash of roughly $15 billion to $20 billion over the course of the year from a three-cent drop in the Canadian dollar."
"Outside the energy sector, the outlook for investment is positive."
Poloz noted, "While there’s still a risk that lower oil prices could have a greater impact, the signs we have seen to date lead us to believe that the impact of the shock is proving to be faster than we first expected, but not larger.
Poloz added that the bank will be renewing its inflation targeting agreement with the government next year. One of the areas being re-examined is whether the BoC should continue to use the core inflation measure as "the main guide."
Adding that BOC rate cut is having positive impacts, "Bank staff estimate that a household that has renewed a $100,000 mortgage would save about $250 in interest payments this year … But the really big impact is for companies with existing exports contracts in US dollars, which would see a bump in cash of roughly $15 billion to $20 billion over the course of the year from a three-cent drop in the Canadian dollar."
"Outside the energy sector, the outlook for investment is positive."