December 18, 2018 / 3:02 AM / 2 years ago

Pace of Canada rate hikes could be interrupted: central bank head

OTTAWA, Dec 17 (Reuters) - The pace of interest rate hikes in Canada could be interrupted or sped up depending on the economic circumstances, Bank of Canada Governor Stephen Poloz said on Monday.

The comments by Poloz to CTV in an interview are another sign the central bank - which has hiked rates five times since July 2017 - could put on the brakes amid recent signs the economy is underperforming.

The bank kept rates on hold on Dec. 5 and suggested the pace of future hikes could be more gradual, citing disappointing growth and low oil prices.

The current overnight interest rate is 1.75 percent and Poloz reiterated that it needed to reach the “neutral” range of 2.5 to 3.5 percent where monetary policy is neither stimulative nor accommodative.

“Getting there is a journey and we expect over time to get there. But it can be interrupted or it could be sped up depending on how the economic data evolve,” said Poloz.

Market expectations of a rate increase on Jan. 9, as reflected in the overnight index swaps markets, are a lowly 2.26 percent.

Poloz said the economy was generally in a good place, but he cited increasing uncertainty about the global trading system as a major risk.

“We’re certainly not expecting a recession in 2019 but I do think that everyone needs to be prepared for volatility. We are in a volatile world ... every week something new is happening,” he said. (Reporting by David Ljunggren; Editing by Peter Cooney)

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