Oliver confident QE not necessary to aid Canada's sputtering economy
TORONTO—Finance Minister Joe Oliver says he doesn’t see any need for quantitative easing, despite concerns that the country may have fallen into a recession.
“We don’t see any need for quantitative easing in this environment,” Oliver said Tuesday at Ryerson University in Toronto, where he was promoting an expanded free trade agreement with Israel.
“I mean, after all, we’ve seen 90,000 jobs created this year, and we look forward to a positive year of growth.
“Quantitative easing is not on the table.”
Some experts have wondered about the possibility of quantitative easing after the Bank of Canada cut its key interest rate last Wednesday by a quarter of a percentage point to 0.5 per cent.
Quantitative easing is a monetary policy that would see the Bank of Canada purchase government securities or other securities in an effort to increase the supply of money and stimulate the economy.
Other areas of the world have used the measure when they have fallen on hard times.
The European Central Bank has been buying 60 billion euros a month in government and corporate bonds, and the U.S. Federal Reserve implemented a $85 billion a month bond-buying program to kick-start its economy before ending the program late last year.
The debate over quantitative easing has sparked controversy in the past.
Oliver’s predecessor drew criticism in October 2013, when former finance minister Jim Flaherty described the American policy as “the printing of money” and said he never supported it. That was despite appearing to back the Federal Reserve’s decision in 2010.
Flaherty also signed off on a similar policy in 2009 during the height of the financial crisis, although it was never implemented.
In reducing its overnight rate last week, the central bank also predicted a contraction in the second quarter due to lower oil prices and slumping exports – which, if true, would mean that the country fell into a technical recession, though Bank of Canada governor Stephen Poloz hasn’t used the r-word.
Poloz said he sees reason to believe there will be renewed growth in the third quarter, but he added that if matters don’t unfold as anticipated, the Bank of Canada has room to manoeuvre as well as other “tools” in its monetary policy toolbox.