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MNI INTERVIEW: BOC Has Scope To Cut To Neutral- BDC's Cleroux

Chief economist of federal small business bank discusses Canada's outlook.

MNI (OTTAWA) - Moderating inflation and weaker economic growth give the Bank of Canada room to lower interest rates at each of its three remaining meetings this year and ultimately back to a neutral setting, while moving too slow risks a recession, the federal small business bank's chief economist told MNI.

Retailers and builders are already facing some noticeable job losses and weak demand, Pierre Cleroux of BDC said, and while that’s part of the Bank’s plan to return inflation to target, tight policy now needs to be relaxed. Firms need incentives to boost investment as the economy softens and the prospect of U.S. trade protectionism following its elections adds another layer of uncertainty to what so far has been a strong year for manufacturing and exports, he said.

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MNI (OTTAWA) - Moderating inflation and weaker economic growth give the Bank of Canada room to lower interest rates at each of its three remaining meetings this year and ultimately back to a neutral setting, while moving too slow risks a recession, the federal small business bank's chief economist told MNI.

Retailers and builders are already facing some noticeable job losses and weak demand, Pierre Cleroux of BDC said, and while that’s part of the Bank’s plan to return inflation to target, tight policy now needs to be relaxed. Firms need incentives to boost investment as the economy softens and the prospect of U.S. trade protectionism following its elections adds another layer of uncertainty to what so far has been a strong year for manufacturing and exports, he said.

Keep reading...Show less