* Poloz says nothing more BoC can do to spur growth
* Declines to comment on bank's 14-month tightening bias
* Says business confidence crucial, urges patience
* Analysts see no sign of policy shift
By Euan Rocha and Peter Henderson
BURLINGTON, Ontario, June 19 Bank of Canada
Governor Stephen Poloz signaled a hands-off approach to monetary
policy on Wednesday, calling for patience, at least for now, in
"letting Mother Nature do her usual job" in rebuilding an
economy he said was still damaged.
Poloz said substantial monetary stimulus, combined with a
pickup in foreign demand for exports, especially in the United
States, would gradually restore confidence and let corporate
Canada take the baton from indebted consumers in driving growth.
In his first speech and news conference after becoming
governor on June 3, Poloz would not say if he agreed with the
mild interest rate-hike bias held by his predecessor in the job,
Mark Carney, over the past 14 months.
But he made clear rate cuts were not on his radar, even as
he repeatedly described the recovery from the 2008-09 recession
as tougher than any other, given reduced capacity in the auto
sector and other industries and greater business uncertainty.
"I think it's a matter of letting Mother Nature do her usual
job," Poloz said in response to a question about what more the
central bank could do to spur growth. "We have already set the
table. Interest rates are low, there's plenty of stimulus in the
Doug Porter, chief economist at BMO Capital Markets, warned
against reading too much into Poloz's remarks.
"I would not be changing forecasts one iota on his remarks.
For every quasi-dovish remark ... there was a quasi-hawkish
remark," he said. "I think he was seeking to make no impact on
the markets, and appears to have mostly achieved that goal."
The bank next sets rates on July 17. A May 23 Reuters poll
of economists forecast a rate hike no earlier than the fourth
quarter of 2014.
Poloz's comments were overshadowed by remarks by U.S.
Federal Reserve Chairman Ben Bernanke at a Wednesday news
conference. Bernanke said the U.S. central bank might slow the
pace of its bond purchases later this year and bring them to a
halt in mid-2014, spurring a sharp Canadian
dollar drop against the U.S. dollar.
In his appearances, Poloz gave Canadians a glimpse of their
new central bank chief as a down-to-earth communicator who shies
away from economic jargon and peppers his answers with "gee
whiz" and "gosh" as well as the occasional joke.
Asked about interest rates, he paused, gave a non-committal
answer, and added: "We're going to think about it real hard."
The Bank of Canada was the first among the Group of Seven
industrialized nations to hike rates after the global recession,
pushing its overnight target rate to 1 percent in mid-2010.
Since April 2012 it has signaled that the next move in rates
also will be up, not down, although it has made clear it is in
no rush given the disappointing economic backdrop.
HOUSING MARKET NOT OVERHEATED
On the issue of Canada's heated housing market, a top
concern for Carney, Poloz said he saw no evidence of
overheating, but acknowledged there is a risk to the economy
that the bank is monitoring.
Nor did he seem overly concerned about record levels of
household debt, saying he was confident Canadians were heeding
the bank's message that "interest rates will rise at some point"
and that they would manage their debt accordingly.
Business, not consumers, should now become the engines of
growth, he said, noting that the bank would seek companies'
insight about the economy because it can no longer rely on its
usual models given the heightened uncertainty.
"The models that we use are not really equipped to deal with
the situation that we find ourselves in," he said.
He said the biggest risk to the Canadian economy is
external, with Europe's problems likely taking a long time to
unwind, but reason for optimism in Japan and the United States.
"So right now, we're thinking 'Yeah, the glass is half full
and off we go.' But that doesn't mean we couldn't have a
surprise, like we've had before."
Business investment has been slower to rebound than after
previous recessions, and it slowed in the second half of 2012.
In April, the central bank forecast a subdued pickup in business
investment growth in 2013.