Analysis - Canada's new central bank chief: a corporate comeback kid?

Wed Jun 26, 2013 7:06am EDT
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By Louise Egan

OTTAWA (Reuters) - Forecast modeling is not all it's cracked up to be, Canada's new central bank chief says. So he's employing a new tool: talking to "real people."

And the real people of most interest to Stephen Poloz are Canada's corporate chiefs who, in his view, hold the key to a more robust economy.

Poloz has an inside track to these leaders, having led Canada's export credit agency before taking over from Mark Carney, the former Goldman Sachs banker whose market savvy made him a popular policymaker in the midst of the financial crisis.

Just weeks into the job, Poloz' way of talking about the economy and the role of business in it reveals a world view that appears in synch with that of the private sector, which has been reluctant to sink money into new projects until there are guarantees the global economy is safe.

With business investment lagging the overall recovery from the 2008-09 recession, Carney at one point chided companies for sitting on what he called "dead money."

Poloz clearly sympathizes with the corporate view. "I would be cautious, too," he told reporters last week.

The goal is for businesses to loosen their grip on some half a trillion dollars in cash and invest the money to help boost growth. But it won't be easy.

"People were badly burned at the time of the recession and as a consequence businesses have built up their cash reserves," said Perrin Beatty, chief executive of the Canadian Chamber of Commerce and a former Conservative cabinet minister. "Confidence is at a higher level than it was at this point last year. But do people feel we're clearly out of the woods? No."   Continued...

New Bank of Canada Governor Stephen Poloz sits in Canada's Prime Minister Stephen Harper's Langevin Block office in Ottawa in this June 3, 2013, file photo. REUTERS/Chris Wattie/Files