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By Courtney Tower
     OTTAWA (MNI) - Bank of Canada Deputy Governor Timothy Lane made the 
following points Thursday in an Economic Progress Report* speech to the 
Greater Vancouver Board of Trade, Vancouver, British Columbia: 
     -- Lane emphasized Canadian vulnerability in business investment 
and exports to uncertainties over NAFTA and United States trade 
protectionism. The new steel and aluminum tariffs issue, "alongside 
increased protectionist rhetoric, carry potentially serious 
consequences," he said. Even if nothing untoward should happen in these, 
"the uncertainty around them is affecting business investment 
decisions." For this reason and because of lower corporate U.S. taxes 
coming, firms might switch investment from Canada to the U.S. 
     -- The Bank of Canada will not now try to set up monetary policy to 
deal with all the uncertainties, because their "range of possibilities 
is wide," Lane said. The present working assumption will continue until 
concrete outcomes emerge, which is that existing trade arrangements will 
continue over the next two years. Even at that, there are problems ahead 
for energy and non-energy goods exports. 
     -- Present transportation bottlenecks, for pipelining oil from 
Canada into the United States, are expected to persist. "This could have 
a dampening effect in the energy sector." And non-energy goods exports 
"could disappoint" as manufacturing  continues to suffer from 
competitiveness challenges. These challenges in 2017 meant that Canada 
could not fully benefit from strengthening global trade. 
     -- Annual inflation, presently recorded at 1.7%, will climb back to 
the 2.0% target in coming months as gasoline prices pick up on a 
year-over-year basis. 
     -- Lane repeated the Bank's statement Wednesday that it will watch 
closely the data on household spending and home-buying activity, "given 
high household debt." He made the point of noting that household credit 
growth has been decelerating in recent months, but it is too early to 
call it a trend. 
     * Lane's speech is the first in a new series of Economic Progress 
Report speeches scheduled to follow the interest rate decisions that are 
not accompanied by a Monetary Policy Report.  
--MNI Ottawa Bureau;
[TOPICS: M$B$$$,M$C$S$]

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