TORONTO (Reuters) - The Bank of Canada has room to keep interest rates low even if employment starts to pick up, Governor Stephen Poloz said on the sidelines of a central banker gathering on Friday, according to a Bloomberg report.
Persistent slack in Canada’s labor market and the tendency toward part-time job creation has restrained the country’s income growth, Poloz said in an interview at the meeting of policymakers in Jackson Hole, Wyoming, noting the trend of employment growth has been around 1 percent for some time.
“We’re confident there’s quite a bit of room to grow and, particularly since our interest rates are already at 1 percent, we figure we’ve got time to watch this unfold,” Poloz said.
The Bank of Canada has held rates at 1 percent since 2010 and is widely expected to keep them there when it releases its next policy statement on Sept. 3.
Although the most recent jobs report showed Canada created 41,700 jobs in July, that was fueled by part-time jobs while full-time positions actually dropped by 18,100.
Last month’s jobs report had to be restated after Statistics Canada withdrew the initial erroneous report that showed just 200 new jobs had been created.
Poloz told Bloomberg he has “no concerns at all” about the quality of the data from Statistics Canada.
Poloz also told the news agency that investors who think he favors a weaker Canadian dollar are mistaken, and it is to be expected that the currency would weaken at a time when the U.S. economy is gathering momentum.
“The fact the Canadian dollar came down from over 100 to around the 90 area is something which in certain sectors of our export economy would be a welcome development,” Poloz said.
“They’ve been severely stressed during this period of weak growth plus a strong exchange rate. Normally exchange rates act as a shock absorber.”
Reporting by Leah Schnurr; Editing by Jeffrey Hodgson and Tom Brown