(Recasts with comments on outlook, unconventional measures)
By Alastair Sharp
TORONTO Nov 28 Many of the uncertainties
surrounding the economic outlook that the Bank of Canada faced
at its last policy decision still remain, though the central
bank has two major data reports yet to consider this week,
Governor Stephen Poloz said on Monday.
In October, the bank held rates steady but said that it had
actively considered cutting for the third time in two years.
The bank cited uncertainty on a number of fronts, including
geopolitical factors and the impact of recent moves by the
government to boost infrastructure spending and tighten mortgage
"On most of those things, we have very little additional
information since October, so very little has changed therefore
in that analysis," Poloz told reporters on Monday.
Poloz said that uncertainty still needs to be monitored. The
central bank will get reports on the current account and
third-quarter growth this week, which should help the bank
better understand the economic picture, Poloz said.
The bank is widely expected to hold rates where they are
when it meets next week, though some think the market is too
complacent about the prospect of further cuts following the U.S.
election of Donald Trump.
Poloz said the bank would not incorporate U.S. policies into
forecasts until they occur.
Poloz also made clear he had not put away the bank's toolkit
of unconventional measures that could be used if necessary,
which includes negative interest rates and large-scale asset
"The possibility we'd have another downturn in the world
economy is present," he said. "We're not predicting one, we see
no signs of it, but we need to be ready for whatever that next
shock might be."
"Given that we start with interest rates at 0.5 percent, we
need to be ready for the possibility of needing additional tools
because we only have half a point of room to maneuver," he
Poloz made the comments following a speech highlighting the
role of the service sector in bolstering the economy at a time
when it is still struggling with fallout from a drop in
While Poloz acknowledged that the process of getting the
economy back on track has been more gradual than the central
bank would like, he reiterated his forecast that Canada would
close its output gap around mid-2018.
(Reporting by Alastair Sharp; Writing by Leah Schnurr and David
Ljunggren; Editing by Andrew Hay and Kim Coghill)