The Globe and Mail reports in its Friday edition that former Bank of Canada governor Stephen Poloz says slowing inflation with interest-rate hikes is like trying to stop a car with bad brakes. A Canadian Press dispatch to The Globe reports that Mr. Poloz made that comment Thursday in a speech about ways Canada can chart a path toward economic growth during uncertain times. Mr. Poloz warned that today's economy is more sensitive to interest rates than it was 10 years ago. Mr. Poloz estimates annual inflation will fall to about 4 per cent on its own as external factors such as higher commodity prices ease. He said policy action will need to do the rest of the work to get inflation back down to the BOC's 2-per-cent target. "I think that the actions that are being taken to get us there will turn out to be even more powerful than a lot of people think," Mr. Poloz said, citing higher debt loads in the Canadian economy as a vulnerability. He added: "It takes a long time to actually slow down [the economy] and so you stand on the brake really hard. Well, then you're going to cause an accident too." During his speech, Mr. Poloz made the case for government policies that promote stability and clarity for businesses.
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