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Former BOJ Chief Economist interview

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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
[TOPICS: M$C$$$]

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