MNI POLICY:Poloz: Cdn Curve Inversion Not Indicating Recession

By Yali N'Diaye

     OTTAWA (MNI) - The following are the key points from a press conference by

Bank of Canada Governor Stephen Poloz on Monday, following a speech to the

Baffin Regional Chamber of Commerce and the Nunavut Mining Symposium in Iqaluit,

Nunavut:

     - As far as the BOC is concerned, "We're not forecasting a recession,"

Poloz said. The decline in long-term yields is reflecting the expectation that

the risk of future inflation is declining and that economic growth is slowing,

which is already factored into forecasts. He said both the BOC and markets are

data dependent. Poloz also said it is more the case that a yield curve inversion

tends to be closely related to times preceding recessions in the U.S. than it is

the case for Canada. 

     - Given the low interest rate environment since the financial crisis, "We

might have to get used to seeing inversions much more often just as a normal

course of events as data fluctuate." The curve is more often going to be closer

to flat with low yields, making it more likely to see inversions that are just

"innocent ones." "We are looking at an innocent inversion that's more

statistical than indicative of a recession." 

     - He repeated that recent data support the view that the current economic

slowdown is temporary. In its January Monetary Policy Report, the BOC forecast

the slowdown to last six months. The next economic update will be April 24.

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

[TOPICS: M$C$$$]