Poloz denies ‘talking down’ loonie
Tags: Loonie, Stephen Poloz
Bank of Canada Governor Stephen Poloz rejected speculation that he’s trying to boost growth by weakening the Canadian dollar, saying the currency’s decline reflects a deterioration in the economy’s outlook.
“I honestly reject the notion that I’m talking down the dollar,” Poloz told reporters in Istanbul, where he’s attending a meeting of finance chiefs from the Group of 20. “It’s not about what we did. It’s about how the economy has behaved.”
Poloz said that since he was appointed in June 2013, the economy has performed below policy makers’ expectations even before the decline in oil prices.
“It’s only by being open about that and people seeing it happening and oil prices declining on top of that that the dollar has moved,” Poloz said. “The oil-price move, my goodness, oil prices have got to be responsible for 99 percent of what we’ve seen.”
The Canadian dollar has lost 18 percent against the U.S. dollar since Poloz became governor. It’s fallen 2.9 percent since he unexpectedly cut interest rates on Jan. 21 by 0.25 percentage point to 1 percent.
Derivatives trading indicates a better than 50-50 chance the central bank will lower its benchmark interest rate to 0.5 percent at the March 4 meeting. Asked about market expectations for further rate cuts, Poloz said it will all depend on the economy’s fundamentals.
“Markets presumably look at the oil-price shock itself and would ask themselves how’s the economy performing?” Poloz said. “If they figure that out, then they would know what we might have to do.”
“It’s not about what we’re doing with that, it’s about the fundamentals,” he said.
“I honestly reject the notion that I’m talking down the dollar,” Poloz told reporters in Istanbul, where he’s attending a meeting of finance chiefs from the Group of 20. “It’s not about what we did. It’s about how the economy has behaved.”
Poloz said that since he was appointed in June 2013, the economy has performed below policy makers’ expectations even before the decline in oil prices.
“It’s only by being open about that and people seeing it happening and oil prices declining on top of that that the dollar has moved,” Poloz said. “The oil-price move, my goodness, oil prices have got to be responsible for 99 percent of what we’ve seen.”
The Canadian dollar has lost 18 percent against the U.S. dollar since Poloz became governor. It’s fallen 2.9 percent since he unexpectedly cut interest rates on Jan. 21 by 0.25 percentage point to 1 percent.
Derivatives trading indicates a better than 50-50 chance the central bank will lower its benchmark interest rate to 0.5 percent at the March 4 meeting. Asked about market expectations for further rate cuts, Poloz said it will all depend on the economy’s fundamentals.
“Markets presumably look at the oil-price shock itself and would ask themselves how’s the economy performing?” Poloz said. “If they figure that out, then they would know what we might have to do.”
“It’s not about what we’re doing with that, it’s about the fundamentals,” he said.
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