OTTAWA (Reuters) - The pace of Bank of Canada interest rate moves remains uncertain, but it is “almost inevitable” that rates will rise over time, soon-to-be retired Deputy Governor Pierre Duguay said on Tuesday.
The central bank’s Monetary Policy Report last week stated explicitly for the first time that the bank’s outlook assumes “a gradual reduction in monetary stimulus consistent with achieving the inflation target.” At the same time, the bank also ratcheted down its domestic growth forecasts.
“It sets the general profile,” Duguay, 59, told Reuters in an interview ahead of his retirement from the bank on July 29, the week after the bank raised interest rates for the second time in two months.
“But from the high level of monetary stimulus currently in place it’s almost inevitable that there would be some upward movement,” he said.
He added: “It’s important to say that there is always uncertainty. It’s not preordained. We’re talking in general terms.”
Duguay, a deputy governor of the Bank of Canada since January 2000 and part of the group that decides monetary policy, is also responsible for issues related to promoting a stable and efficient financial system.
He said banking capital reforms were ”very close’ to being ready to present to G20 leaders at their summit in South Korea in November.
Agreements on objectives for higher quality capital are already in place, and different measures of leverage must still be examined to see which are most appropriate, Duguay said.
Building capital during good times is also important to help the financial system’s resilience in order to buffer shocks when bad times come, he added.
Duguay is also a member of several committees at Statistics Canada, the government statistics agency.
Echoing comments from Bank of Canada Governor Mark Carney last week, he said it was too early to assess the implications of planned changes to next year’s census.
The government wants to scrap a long-form survey in the census, although critics say the data is essential for decisions on social spending.
Duguay is the last of three senior Bank of Canada officials to retire this year after careers there spanning more than three decades. He will be succeeded by Agathe Cote, who takes up the job on July 30.
Duguay said he has not yet decided on extended plans for his retirement, but has the first day mapped out.
“I will get up later,” he said.
Reporting by Ka Yan Ng; editing by Peter Galloway