MNI: BOC's Poloz: 'Not Really Sure Yet Where Normal Is'

By Courtney Tower

     OTTAWA (MNI) - Both the U.S. and Canadian economies are on an upswing and

looking at higher interest rates as they are returning to "normal", Bank of

Canada Governor Stephen Poloz said Thursday during a press conference, although

"we just aren't really sure yet where normal is."

     After having made clear earlier Thursday in a speech in Moncton, New

Brunswick, to Economic Council and Chamber of Commerce audiences, that the Bank

continues to believe the policy rate hikes will be warranted, Poloz told a press

conference uncertainties in judging the right moments for increases cloud

decision making.

     The Canadian economy, like that of the United States, is on "an upswing,"

he told reporters, and  business investment may be stronger than has recently

been indicated. Still, he said, "confidence is growing but we remain wedded to

the gradualist idea because there are so many things we don't know."

     Poloz said uncertainties remain as to just how heavily indebted households

are reacting to higher interest rates and to mortgage rule tightening from the

federal and provincial governments, as well as the fraught course of NAFTA

negotiations.

     In  his speech earlier, Poloz said: "Of course, being uncertain about the

future does not justify inaction. It does not mean keeping interest rates on

hold until inflation momentum begins to build. What it does mean is that we will

move rates toward a more neutral level gradually, continuously updating our

judgment on these key issues in real time."

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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