The Globe and Mail reports in its Thursday edition that Bank of Canada Governor Stephen Poloz says the door is open for a rate cut. The Globe's David Parkinson writes that since last spring the implication has been that the next rate move could be in either direction, as the economy warranted. Even when the BOC went into some detail last October about having mulled and then dismissed a rate cut, the decision in no way implied that a cut would not return to the discussion if circumstances changed.
The BOC's economic analysis signals that things have, indeed, changed -- for the worse.
In October, the BOC was wrestling with the danger that the economy could buckle under the weight of the China-U.S. trade war and other geopolitical issues, which were straining global trade flows and business investment. Since then, there has been what Mr. Poloz terms "a crystallization" of those risks, seen in a long string of consistently disappointing economic indicators.
The BOC now believes the economy ground to a standstill in the fourth quarter. It sees the slowdown infecting the first quarter, with growth now forecast at a tepid 1.3 per cent annualized. The deterioration of the consumer sector is a concern for the BOC.
© 2020 Canjex Publishing Ltd. All rights reserved.