Global economy at stage where stimulus can be ‘steadily withdrawn’: Poloz
Poloz warns Canadians to get used to the idea of three per cent interest rates as the new normal
OTTAWA – The governor of the Bank of Canada says after a decade of low-interest rates around the world the global economy has reached stronger footing where stimulus can be steadily withdrawn.
Stephen Poloz’s remarks today come as the Bank of Canada signals it will gradually raise its benchmark interest rate from its current level of 1.75 per cent to a so-called neutral stance of somewhere between 2.5 per cent and 3.5 per cent. The big question is how quickly the rate will rise.
Poloz recently introduced the central bank’s fifth hike in 15 months and warned Canadians, many of whom are carrying high levels of debt, to get used to the idea of three per cent interest rates as the new normal.
In prepared remarks of Poloz’s speech in the United Kingdom, he says the world economy has made considerable progress in shaking off the effects of the 2007-08 financial crisis.
He also says the risks of international trade actions, both actual and threatened, have preoccupied investors – but he argues these risks are two-sided and resolutions to disputes can provide fresh economic lifts.
Poloz points to the recent United States-Mexico-Canada trade agreement as an example of this dynamic because the new deal eased fears that the North American free trade pact would be torn up.