MNI 5 THINGS:BOC Offl:Wage Gwth Not Where Shld Be But Closer>

By Yali N'Diaye

     OTTAWA (MNI) - Following are the key points from Bank of Canada 

Deputy Governor Sylvain Leduc's speech to the Association des 

Economistes quebecois and the CFA Quebec, providing an economic update: 

     -- On wages, the wage-common measure shows growth of 2.6% in the 

first quarter, while wages should grow at an annual rate of around 3% at 

this stage of the business cycle. Given that wage hikes in Ontario are 

contributing to the increase, wages are growing "somewhat more slowly 

than we would expect to see in an economy operating at capacity." This 

indicates "that some slack remains." However, "wages are rising at rates 

closer to what would be expected in an economy operating at potential."  

     -- Leduc cited "elevated trade policy uncertainty"  that is 

restraining business investment, although the stronger-than-expected 

increase in imports of machinery and equipment in the first quarter 

"bodes well for business investment growth." On housing, he expects 

resale activity to recover in the second quarter. More data in the weeks 

ahead will help inform the BOC's understanding of the adjustment process 

to new mortgage rules and higher borrowing rates. 

     -- On the external front, Canada's main trading partners "show 

solid growth" and global growth should remain "strong" and support 

Canadian exports. On the downside, he cited financial stress in some 

emerging markets and in Europe. The BOC is also monitoring exporters' 

competitiveness "very closely." 

     -- On oil, he said higher prices for Canadian oil prices since 

April should benefit the Canadian economy on net. Nevertheless, "given 

the uncertainties the oil sector faces, the prospect of substantial 

increases in investment are not likely to be as high as in past cycles." 

He repeated that the impact of higher oil prices on headline inflation 

will be transitory.  

     --Overall Leduc repeated that the BOC decided Wednesday that the 

current policy stance remains appropriate and that the central bank will 

take a gradual and data dependent approach. He said policy remains 

accommodative. Data since April supports the BOC's near-term 

projections. 

--MNI Ottawa Bureau; yali.ndiaye@marketnews.com

[TOPICS: M$C$$$,MACDS$]