Stephen Poloz, one of the few central bankers to resist the global push toward easier monetary policy last year, said the door is open for the Bank of Canada to cut interest rates if the current economic slowdown persists.
The governor, speaking to reporters after a rate decision Wednesday that left the key interest rate unchanged at 1.75%, said growing slack in the economy threatens to dampen inflation pressures. The central bank chose not to cut, however, because policy makers didn’t want to fuel household debt levels that remain a vulnerability to the economy.
“I’m not saying that the door is not open to an interest rate cut, obviously it is, it is open,” Poloz said when pressed on the issue, adding borrowing costs remain “appropriate” for the time being.
The more negative outlook is a departure from recent communications in which officials sought to accentuate the positives of an economy deemed resilient in the face of global uncertainty. The decision to hold for a 10th-straight meeting leaves the Bank of Canada with the highest policy rate among major advanced economies, but the downturn in domestic data since the end of last year has clearly spooked policy makers.