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Poloz’s affirmation that household imbalances won’t colour decision-making probably comes as a surprise to some analysts on Bay Street and Wall Street. In the run-up to the bank’s decision and in the commentary that followed, many private-sector economists suggested monetary policy makers would be reluctant to further inflame household debt and imbalances in the real estate market, which have been cited as key vulnerabilities in the domestic financial system.

“When we saw the comment on imbalances in the statement, I thought that might represent a signal that the bar to a cut is a little higher,” said Brian DePratto, an economist at Toronto-Dominion Bank. “The interview would suggest that’s not the case.”

Others cautioned against putting too much weight on the comment by Poloz, as it belies the bank’s recent messaging and emphasis on household imbalances that feature prominently in the bank’s statement, its Monetary Policy Report, and Financial System Review.

“The height of the bar for a cut, so to speak, would, of course, be higher if household imbalances were included,” said Frances Donald, senior economist at Manulife Asset Management. “But household imbalances aren’t the only – and may not be the primary – reason to not cut rates further.”

Cutting rates won’t help investment in the oilpatch recover, she said. Meanwhile, a significant drop in the currency could drain the Canadian consumer’s purchasing power. That could cause a problem for the bank, which is counting on consumption to drive growth in 2016. In addition, Poloz appears disinclined to approach the zero lower bound for interest rates, according to Donald.

Bloomberg.com