New Bank of Canada chief less explicit in rate-hike stance

Thu Jun 6, 2013 2:15pm EDT
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By Louise Egan and Randall Palmer

OTTAWA (Reuters) - The new governor of the Bank of Canada said on Thursday that interest rates will rise one day, but he stopped short of repeating his predecessor's explicit guidance on the likely need for rate hikes, rather than cuts, in the future.

In his first public appearance since taking the reins at the central bank on Monday, Stephen Poloz said he sees no immediate risk from current rock-bottom interest rates, although he did not want loose monetary policy to last for too long.

Many analysts had expected Poloz to be more dovish than previous Bank of Canada Governor Mark Carney, who stepped down last month after a year beaming out a clear message that the bank's next move would be a rate increase.

The message from Poloz could be interpreted either way, the analysts said.

"Low (rates) for hopefully not too long gives you the outcomes you need to get through this crisis and then as the world unfolds we get back to normal, and that's our outlook," Poloz told the House of Commons Finance Committee.

"We don't see evidence that those risks (of low interest rates) are manifesting themselves in a threatening way at this stage, but they'll be carefully monitored, and that trade-off continues to be made as we go along."

Not yet accustomed to Poloz' folksy speaking style, some economists concluded he was holding the line on monetary policy while others detected a slightly more dovish tone.

"Overall, I don't think we're going to see a big change in stance from the Bank of Canada come July," said Krishen Rangasamy, senior economist at National Bank Financial.   Continued...

Bank of Canada Governor Stephen Poloz prepares to speak before a parliamentary committee on Parliament Hill in Ottawa June 6, 2013. REUTERS/Blair Gable