Canada must let negative forces behind low dollar, oil prices play out: Poloz

OTTAWA -- The Bank of Canada says overcoming the economic suffering inflicted by the commodity-price shock essentially boils down to one main option: ride it out.

See Full Article

In a speech Thursday, central bank governor Stephen Poloz said no simple policy response will fix the problem, although some measures can buffer the negative effects of factors such as the steep slide in oil prices.

"The forces that have been set in motion simply must work themselves out," Poloz said in a prepared text of a speech at Ottawa City Hall.

"The economy's adjustment process can be difficult and painful for individuals, and there are policies that can help buffer those effects, but the adjustments must eventually happen."

Under Poloz's leadership, the central bank lowered its trend-setting interest rate twice in the last 12 months to help cushion the blow of the oil slump.

He noted that Canada's the dollar has tumbled along to roughly the same levels they stood at over a decade ago.

"It is not a coincidence that the Canadian dollar is about where it was back in 2003 and 2004 -- oil prices are also about where they were back then," said Poloz, who also listed some of the benefits of a lower loonie.

At the time of the speech, the loonie was trading below 71 cents US, about where it was in mid-2003 as the currency when it was recovering from a historic low of 61.79 cents US set in January 2002.

A benchmark oil price ducked under US$34 a barrel on Wednesday, the lowest level since 2008, but was even lower on Thursday. Poloz noted that oil prices were around US$25 per barrel in 2002.

Almost like it was 2002 all over again, Poloz said the complex economic changes have led to higher consumer spending, falling employment and lower investment in the resources sector. Non-resources sectors, meanwhile, have seen rising employment and investment, Poloz added.



Advertisements

Latest Economic News

  • DavidsTea swings to loss on charges but says e-commerce improving

    Economic CTV News
    MONTREAL - DavidsTea Inc. says it swung to a loss in its last quarter as onerous contract charges and impairments weighed on its balance sheet. The specialty tea retailer says it had a loss of $16.1 million for the fourth quarter ending Feb. Source
  • Rogers profit rises by more than a third to $425M

    Economic CBC News
    Rogers Communications Inc. reported a $425 million net profit in its first quarter, up 37 per cent from $310 million in the comparable period last year. The wireless, cable, internet and media company's adjusted earnings grew even more, rising by 45 per cent to $477 million under new accounting rules that Rogers began using in the quarter ended March 31. Source
  • Ottawa's new privacy rules give businesses flexibility on reporting data breaches

    Economic CTV News
    OTTAWA -- Federal data breach regulations set to take effect Nov. 1 will require mandatory reporting of security breaches that pose a "real risk of significant harm," but give businesses flexibility about how that's done. Source
  • Spat breaks out between Tim Hortons franchisee factions over public complaints

    Economic CBC News
    The Tim Hortons franchisee advisory board is slamming a group representing at least half of the brand's restaurant owners for publicly making complaints about their parent company Restaurant Brands International Inc. In a letter to franchisees obtained by The Canadian Press, the board argues that the comments by the Great White North Franchisee Association criticizing the company in the media and to the federal government is corrosive and damaging to the Tim Hortons brand. Source
  • Acacia Mining production drops 45 per cent as Tanzania troubles persist

    Economic CTV News
    TORONTO -- A subsidiary of Toronto-based Barrick Gold Corp. says gold production at its Tanzanian operations plunged 45 per cent last quarter as it grappled with export restrictions from the country. London-based miner Acacia Mining, owned 64 per cent by Barrick, says the drop in production resulted from reduced operations at its Bulyanhulu mine and producing mostly from lower-grade stockpiles at its Buzwagi mine. Source
  • Supreme Court beer ruling could apply to Alberta-B.C. pipeline war, experts say

    Economic CTV News
    CALGARY -- A Supreme Court of Canada ruling on bringing beer from Quebec into New Brunswick has implications for the trade war between Alberta and B.C. over the Trans Mountain pipeline expansion. Experts say the court seems to be addressing the issue in its decision when it notes that while some trade barriers can be allowed in some circumstances, those designed to punish another province or to protect a local industry would not be permissible. Source
  • High cost of dental services prompting some patients to seek alternative options

    Economic CBC News
    An unaffordable price tag kept Melanie Laxson out of the dentist's chair until the pain became unbearable. With no access to insurance, the 38-year-old says there's no way she could afford the full cost of a dentist. Source
  • Canadian airline profits will fall in 2018 on higher costs: Conference Board

    Economic CTV News
    MONTREAL - The Conference Board of Canada says the growth of the country's airline industry will slow in 2018 as profits are forecast to decrease from last year's peak primarily because of higher fuel and labour prices. Source
  • Commodities volatile on $100 US oil talk

    Economic CBC News
    Talk that Saudi Arabia has its sights on $80-$100 US a barrel oil again and of more U.S. sanctions on Russia ignited a rally in commodities and resource stocks on Thursday, though the potential boost to inflation hit fixed-income assets. Source
  • Commodities rollercoaster on $100 US oil talk, sanctions stress

    Economic CBC News
    Talk that Saudi Arabia has its sights on $80-$100 US a barrel oil again and of more U.S. sanctions on Russia ignited a rally in commodities and resource stocks on Thursday, though the potential boost to inflation hit fixed-income assets. Source