Below are some key quotes from a news conference by Bank of Canada Governor Stephen Poloz following a year-end speech in which he said the central bank is growing increasingly confident that the economy will need less stimulus over time.
POLOZ ON RECENT HIGHER WAGE DATA
“We put stock in all those data, but that doesn’t mean there’s no slack left in the market. It’s just that wages may be showing the early signs of picking up. In particular, when aggregate wages are going up, they may only be going up in sectors that are tight, leaving lots of excess supply elsewhere in the labor market.”
“Wages, despite the fact that they have upticked, are still well below their typical level at this stage of the business cycle, so we know there is slack underneath there.”
POLOZ ON NAFTA UNCERTAINTY
“The uncertainty about NAFTA has been a persistent issue for the full year now. As we’ve indicated, the way we’re modeling it is not, per se, through how trade effects might sort themselves out, which is a highly ambiguous thing that depends very much on individual firm responses and varies a lot across sectors. But we think the one thing that they all have in common is the uncertainty is holding back to a certain extent investment decisions, and that’s a more profound effect on the economy.”
POLOZ ON MORTGAGE REGULATIONS
“I won’t prejudge them. They haven’t even been introduced yet. Right now, what we’re doing is monitoring how last year’s changes are affecting mortgage lending and we’ll be watching carefully as the new ones are put in place to watch how the system responds.
POLOZ ON BLOCKCHAIN
“It’s more like gambling than investing. I think that it is a situation which has the ingredients of something that could be a significant disturbance. I’m hopeful that the system will treat it cautiously from here.
POLOZ ON DOWNSIDE RISK TO INFLATION FORECAST
“If the economy is operating near potential but we think there’s still a transition phase where the economy will build more potential, which is what I have in mind with that reintegration into the workforce combined with investment, means that potential output should grow a little faster than our assumption, so that introduces that downside risk to our inflation forecast.”
POLOZ ON FOCUS ON DATA
“The quarterly data points are the most important, because they have a fullness to them. But in between national accounts we get the labor market data points, we get wage data, we get trade, survey data, we get all those things. And it’s about keeping that full array in focus so we can keep assembling our story as we go through.”