OTTAWA (Reuters) - Bank of Canada Governor Stephen Poloz said on Wednesday interest rates would rise from their current “very low” levels if headwinds affecting the Canadian economy were to dissipate.
Poloz also told the Senate banking committee that high levels of personal debt meant the economy was more sensitive to interest rates than ever.
Last week, the central bank made clear rate hikes were off the table for now, given the economy was struggling to cope with lower oil prices, weak household spending and the impact of global trade conflicts.
“If those headwinds dissipate, then interest rates would rise,” Poloz told the committee. A few minutes later he said “for the moment we still have very low interest rates.”
The bank’s main overnight rate is 1.75 percent, below the so-called neutral range of 2.25 percent to 3.25 percent, when monetary policy neither stimulates nor restrains growth.
Poloz has made clear that any future rate hikes or cuts will be heavily data dependent.
Reporting by David Ljunggren; Editing by Tom Brown