BoC Governor Stephen Poloz told the House of Commons Standing Committee on Finance that since six months ago, there was a “couple of negative developments” that have caused a “detour for the economy and are delaying its return home.” Nevertheless, he’s confidence that the impacts would be “temporary”, and “stronger economic growth will resume” after associated adjustments.
On the developments he said, firstly, the global economy slowed as affected by “US-led trade war”. Secondly, there was sharp decline in oil price late in 2018, which put Canada’s oil sector under “considerable stress”. Also, BoC have continued to watch how the housing markets is adjusting to policy measures and past rate hikes. Fourthly, combined impact of adjusted spending plans of federal and provincial governments led to reduction in growth projections.
Poloz noted that there is good reason to believe that the economy will accelerate in the second half of this year. In this context, the Bank’s Governing Council judges that an accommodative policy interest rate continues to be warranted.
