12.6 C
New York
Wednesday, October 27, 2021

Bank of Canada increasingly sure economy will need less stimulus

Bank of Canada increasingly sure economy will need less stimulus© Reuters. FILE PHOTO: Bank of Canada Governor Stephen Poloz attends a news conference in Ottawa

TORONTO, (Reuters) – The Bank of Canada is growing increasingly confident that the economy will need less stimulus over time, Governor Stephen Poloz said on Thursday, adding that the economy is in a sweet spot after making “tremendous” progress over the last year.

In a year-end speech, Poloz said current monetary policy “clearly remains quite stimulative” despite two interest rate hikes earlier in the year, adding that the economy is close to reaching its full potential.

“We are very encouraged by this, and we are growing increasingly confident that the economy will need less monetary stimulus over time,” Poloz said in prepared notes for a speech to the Canadian Club in Toronto.

While a mechanical approach to setting policy would suggest rates should already be higher, the bank still sees signs of ongoing but diminishing slack in the labor market, Poloz said.

Canada’s economy is near capacity and growth is forecast to continue above potential, posing an upside risk to the inflation forecast, he said. At the same time, labor market slack poses a downside risk.

“Given the unusual factors at play, the bank is monitoring these risks in real time – the term we use for this is ‘data dependent’ – rather than taking a mechanical approach to policy setting,” Poloz said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source: Investing.com

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

10,838FansLike
12,893FollowersFollow
756FollowersFollow
- Advertisement -

Latest Articles

Popular Articles