The Bank of Canada may drop its bias for raising interest rates as a slowing global economy reduces demand for the nation’s exports such as metals and fertilizer, ending its outlier status among the Group of Seven.
Bank of Canada Governor Stephen Poloz said confidence about global demand is bringing a “tipping point” where business investment takes over the lead in output growth from “tired” consumers and erases slack in the economy without rapid inflation.
Canadian factory sales unexpectedly fell in June, with the third decline in four months underlining the struggles faced by exporters in rebuilding sales even as the U.S. economy shows signs of strengthening.
Bank of Canada Governor Stephen Poloz kept his main interest rate unchanged and reiterated that current monetary policy remains appropriate as an expected rotation of demand to exports and investment is being delayed.
Employment and housing figures released today confirm that Canada’s economy is cooling faster than the central bank had forecast, indicating the Bank of Canada will refrain from raising interest rates until next year, economists said.