Stephen Poloz is warning Canadians to brace for subpar economic growth in the first quarter, but the Bank of Canada Governor has his "fingers crossed" about the rest of the year.

Economic growth could miss the central bank's own 1.5-per-cent forecast for the first three months of the year as frigid weather and a front-loaded hit from the oil price collapse take a toll, Mr. Poloz said Thursday.

But that doesn't necessarily mean another rate cut on April 15, the bank's next scheduled monetary-decision day.

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Speaking to reporters after a speech in London, Mr. Poloz said the bank would need to see more evidence of cheap oil's destructive effects before considering another dose of interest-rate relief – what he calls "insurance."

A weaker-than-expected first quarter wouldn't "necessarily change our thinking about that insurance question," Mr. Poloz explained to reporters. "What we need is a longer string of evidence to sort that out."

The Bank of Canada jolted financial markets with a surprise quarter-percentage-point cut to its key interest rate in January. Then, it left the rate on hold at 0.75 per cent at its March 4 rate-setting.

Most analysts say a rate cut next month looks increasingly unlikely.

Unless conditions change, "the bank doesn't appear to be itching to cut rates further," Bank of Montreal senior economist Benjamin Reitzes said.

Toronto-Dominion Bank economist Randall Bartlett now expects the bank to keep interest rates unchanged until late next year.

Despite his misgivings about the first quarter, Mr. Poloz is sounding increasingly upbeat about the rest of the year, particularly in manufacturing and other non-energy exports.

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"We're seeing good momentum in several pockets of the manufacturing sector," he said, citing autos, building materials, forest products and packaging.

"These sound like tame things, but they are pretty important categories that are connected to the investment story in the U.S.," he said.

In his speech in the British capital, Mr. Poloz vigorously defended the central bank's recent actions, insisting that stable inflation expectations are proof its credibility is intact.

The bank has drawn fire from some economists for inadequately telegraphing and explaining its Jan. 21 rate reduction, which sent the Canadian dollar spiralling downward.

But Mr. Poloz said financial turmoil is the inevitable consequence of a gradual return to normal monetary conditions after years of extraordinary efforts to keep interest rates ultra-low.

"This represents the natural reaction of financial markets to economic uncertainty and a return to a normal trading environment – not an erosion of central bank credibility," Mr. Poloz said at a gathering of the Canada-United Kingdom Chamber of Commerce.

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Mr. Poloz said the central bank is continuing to closely monitor the oil price and would do what's necessary to keep inflation near its 2-per-cent target.

"The negative effects of lower oil prices are beginning to appear. The positives take longer to emerge," he pointed out. "So we need to watch these competing forces play out in the economy."

He insisted that the bank is "increasingly comfortable" the January rate cut was the right move, particularly now that the price of crude has stopped tumbling and financial conditions have eased.

Later, in response to a question from the audience, Mr. Poloz argued that "underlying inflation" is lower than February's 2.1-per-cent rate because it's being propped up by "transitory" factors, including the cheaper Canadian dollar. A lower dollar makes imported products more expensive.

Strip out temporary factors, and the real rate is like closer to 1.6 to 1.7 per cent annually, he said.