BoC cites strikes, bad weather as contributing factors to mixed Q4 data

Bank of Canada’s Poloz had been taking questions in an armchair chat session and later a press conference following the prepared remarks and delivery to the Greater Vancouver Board of Trade’s Economic Outlook Forum.

Key notes

• Bank of Canada’s Poloz, asked about weak Q4 data, cites strikes, bad weather as contributing factors to mixed data.
• Bank of Canada’s Poloz says inflation has been very close to 2% target, economy close to capacity for close to two years.
• BoC’s Poloz says if inflation is on target you can treat every shock symmetrically.

Prior comments

• Poloz says investment may be stronger than we believed all along. 
• Poloz says trump re-election would lead to continued economic uncertainty.

Earlier, there were remarks prepared for delivery to the Greater Vancouver Board of Trade’s Economic Outlook Forum as follows:

• Bank of Canada Governor says a combination of healthy employment and wage growth, and immigration-fuelled population growth is driving ‘fundamental demand’
• Bank of Canada Governor Stephen Poloz issued a warning to a Vancouver audience about the risks of a return of “froth” to the housing sector, saying that the central bank is watching for signs that the renewed strength in housing in provinces such as British Columbia could re-ignite speculation in those markets.
• Mr. Poloz attributed the return of strength in housing activity – particularly in B.C., Quebec and Ontario – to a combination of healthy employment and wage growth, and immigration-fuelled population growth. That is driving “fundamental demand” that, he said, “appears to be outpacing our ability to build new homes, which can put renewed pressure on prices.”
• However, he cautioned, “We will be watching for signs of extrapolative expectations returning to certain major housing markets – in other words, froth.”

Note

The Vancouver event marked the last public address from Bank of Canada officials prior to the Jan. 22 interest-rate decision and Monetary Policy Report, the central bank’s quarterly update of its economic outlook.