Bank of Canada governor Stephen Poloz says youth unemployment and underployment is the issue that troubles him “most personally.”
The Bank of Canada governor says it’s been a “tough go” for many young people in the recovery from the financial crisis.
There is no prearranged route for further interest-rate hikes from the Bank of Canada, Poloz insisted this week as he signalled the bank would be taking a more cautious approach to any future increases.
The central bank raised rates twice over the summer following the economy’s surprisingly powerful start to the year.
Moving forward, however, Poloz said bank officials will carefully assess a long list of lingering unknowns and external risks to their outlook. The goal is to update their understanding of the economy “in real time,” he said.
“There is no predetermined path for interest rates from here,” Poloz said in a speech to the local board of trade in St. John’s.
“Although we are confident that the economy has made significant progress, we simply can’t be certain of exactly how far there is left to go.”
Poloz’s speech comes after the sizzling Canadian economy spurred the bank to raise the rate twice — first in July and then again earlier this month.
Poloz shared several “unusual” unknowns now under close watch by the bank as it considers future moves. They include elevated levels of household debt, downward pressure of technological breakthroughs on inflation and slower-than-expected wage growth.
He also noted how the period since the financial crisis has brought in a protracted period of slow economic growth and extremely low interest rates.
“The fact is, nobody really knows,” Poloz said in response to a question about where rates could go from here.
“We’re in uncharted territory.”
In his address, Poloz warned that more surprises could lie ahead — in “either direction.”
The speech pointed out that the bank’s decisions have become “particularly” data-dependent due to uncertainties such as geopolitical developments and protectionist sentiments in some parts of the world.
He also offered details about the bank’s decision to raise the rate a second time following a run of unexpectedly strong economic numbers.
Poloz noted, however, that he doesn’t expect the economy to maintain the torrid pace it set in the first half of 2017.
The Canadian Press