Economy shows the time is right for interest rate hikes - BoC's Poloz

Central bank says that it will decide based on actual economic data, not on political rhetoric

Economy shows the time is right for interest rate hikes - BoC's Poloz

Bank of Canada Governor Stephen Poloz stated that the economic “big picture” at the moment warrants a gradual increase in interest rates, especially since these rates are still hovering at historically low levels.

Poloz said that he is expecting to continue raising interest rates due to inflation already reaching the BoC’s 2% target. He didn’t provide a specific timing or pace of any possible hikes, however.

The central bank added that intensified trade uncertainty due to recent political developments does not deter its predictions. The BoC stated that it will take into account only concrete factors such as the U.S. steel tariffs and the Canadian government’s retaliatory measures in deciding upon future interest rate movements.

“We’re data dependent, not headline dependent,” Poloz told Bloomberg. “We’re not going to make policy on the basis of political rhetoric or any of that.”

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“We’ll ensure that that is a gradual process because there are certain issues that we must monitor along the way, and we’ve laid those out.”

The central bank’s governor emphasized that GDP for Q1 2018 came in exactly as the bank’s predictions have indicated. He also said business investment remains “reasonably robust.”

Poloz’s policy decision is scheduled for July 11, and investors have placed 50-50 odds of a hike next month.