BOC’s Poloz is upbeat on investment despite NAFTA uncertainty

Poloz did the media rounds on the weekend

USD/CAD is down a quarter-cent to start the week as the US dollar loses ground across the board.

The Canadian dollar side of the trade is at the mercy of trade headlines this week. It’s underperforming its commodity-currency cousins so far today.

On the weekend, Bank of Canada Governor Stephen Poloz spoke to reporters and highlighted uncertainty about trade in comments to Reuters. He also spoke to BNN and said that he was still encouraged by growth numbers, despite trade headwinds.

He highlighted that non-residential investment was up an annualized 11% in the first quarter and that imports of machinery and equipment have been good.

“We have anecdotes, companies that have told us that they aren’t
[investing]; at the same time, the investment numbers have been pretty
good,” Poloz said, in comments that will be aired at 1:20 pm ET.

Poloz also chaired a meeting of global central bankers and said the two main topics were the possibility of growth without inflation and the neutral level of rates.

“Those two assumptions alone and their intersection give you all
kinds of scope for uncertainty and ranges around things that you’re
looking at,” Poloz said.

He said that central banks don’t want to risk falling back into another recession so they generally plan to wait “a little bit longer before” inflationary pressures show
up.

“That means that there’s probably more room to grow before
inflation pressures are actually evident, but you don’t know that for
sure,” Poloz said.

The OIS market is pricing in a 74.7% chance of a BOC hike on July 11.