Timing of Bank of Canada’s next statement gives it potential to tinge election
|Toronto Star 23 Aug 2019 at 15:23|
OTTAWA - Canadians last heard the Bank of Canada’s take on the economy in the early days of summer — and the timing of its next update has the potential to tinge political debate during the federal election campaign.
Since the bank’s most-recent public comments in early July, there’s mounting evidence of a slowing global economy mostly due to the escalating U.S.-China trade war — including fresh Chinese tariffs Friday and new threats by U.S. President Donald Trump.
The Bank of Canada’s most-recent message underlined the resilience of the domestic economy, and it appeared in no rush to move its policy even as other central banks were poised to lower rates to respond to the already dimming international outlook.
Scotiabank chief economist Jean-Francois Perrault predicts the Bank of Canada will take out insurance against potential damage by cutting rates this fall — and perhaps as early as Sept. 4 — because external risks have intensified since July.
Perrault says a rate reduction at the start of the federal election — or even the appearance of the bank tilting towards the possibility of a cut — could force political parties on the campaign trail to explain how they would react if things get worse.
Former parliamentary budget officer Kevin Page says Canada appears to be well-positioned to handle an economic downturn, but he expects political parties will be challenged to lay out how far they’d be willing to go to stimulate the economy, if necessary.
Bank of Canada governor Stephen Poloz has been meeting this week with his global peers at the Fed’s policy conference in Jackson Hole, Wyo.