After two consecutive interest-rate rises, the Bank of Canada now will work from a clean slate when making rate decisions as it contends with an uncertain outlook for inflation, Gov. Stephen Poloz said Wednesday.
The biggest challenge for the central bank is managing an economy that is quickly approaching full capacity while inflation remains well below its target of 2%, Mr. Poloz said in prepared remarks he was set to deliver in St. John's, Newfoundland.
At a minimum, Mr. Poloz said, the two rate cuts it delivered in 2015 amid the oil-price shock were no longer needed. After increases in July and September on stronger-than-expected economic growth, the Bank of Canada's benchmark rate stands at 1%.
"But there is no predetermined path for interest rates from here," the governor said. "The appropriate path for interest rates in [Canada's situation] is very difficult to know, because there are a number of important unknowns around the inflation outlook."
The speech from Mr. Poloz, his first in more than four months, marks the second time in as many weeks senior central-bank officials attempted to manage expectations on the rate-policy front after a shift toward policy tightening. Last week, Bank of Canada deputy governor Timothy Lane said the central bank wanted to gauge the economy's response to steeper borrowing costs and a stronger Canadian currency when making rate decisions.
Write to Paul Vieira at firstname.lastname@example.org
(END) Dow Jones Newswires
September 27, 2017 12:28 ET (16:28 GMT)