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By Courtney Tower
     OTTAWA (MNI) - Following are the key points from Bank of Canada 
Governor Stephen Poloz's speech in Moncton, New Brunswick, Thursday, to  
Economic Council and Chamber of Commerce audiences, in which he 
reiterated that the BOC will be raising interest rates gradually. 
     - In a speech devoted to the benefits, the upside, of the so-called 
"creative disruption" brought on by new digital technologies, Poloz said 
they had nevertheless increased uncertainty for managing the economy. 
There already was "a great deal of uncertainty about the state of the 
economy and the prospects for growth and inflation," he said. That was 
heightened by increasing difficulty in measuring supply and demand in 
the economy as digital technology has changed investing patterns. Still, 
the Bank knows that "higher interest rates will be warranted to achieve 
our inflation target." However, the BOC will keep a gradual, data 
dependent approach: not to too slowly and encourage inflation, nor too 
quickly and choke off economic growth. 
     - The Canadian economy is operating "essentially right around 
capacity," Poloz said. Inflation at 2.8% had eight-tenths of that coming 
from temporary impacts of gasoline costs (0.5 percentage points) and 
cost of air travel (0.3 points). Removal or mitigation of these would 
bring headline inflation to the 2.0% target. The Bank was still 
struggling with the uncertainties of how sensitive Canadians are to 
higher interest rates, given high household debt, and of the extent to 
which business decisions are slowed by uncertainty related to NAFTA 
negotiations and global trade policy. 
     - On the benefits side, Poloz cited five ways in which value is 
being created by the new digital technologies. They were, he said: 
higher profits for companies; higher real wages for employees, new types 
of jobs created; new jobs creating more income that supports growth in 
other sectors; widened growth opportunities even in traditional working 
     - As examples of the benefits spreading out from new spending by 
workers earning higher salaries, Poloz said that this supports jobs and 
growth in unrelated but more traditional areas of the economy - 
construction, renovation, maintenance, manufacturing, tourism. The fifth 
channel of benefit that Poloz cited, which he said might be the most 
powerful, was that as new technologies spread rapidly throughout the 
Canadian economy they spin off new industries and ventures. He cited as 
examples tractors guided by satellites on Prairie farms, drones that can 
assess the health of crops on land or can monitor assets at the bottom 
on the ocean. 
     - Already in Canada, Poloz said "the computer design system is more 
important to the economy than the auto and aerospace sectors combined." 
Jobs in that sector had risen five times faster than had total 
employment for all Canada, and today "accounts for close to 2% of output 
in the Canadian economy." 
     --MNI Ottawa Bureau; 

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