MNI 5 THINGS:BOC Offl:Uncertainties Hit Biz Investment,Exports>

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; yali.ndiaye@marketnews.com

[TOPICS: M$B$$$,M$C$S$]