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OTTAWA Nov 28 The Canadian economy has seen
some recent pockets of weakness but it would take a significant
disruption to the Bank of Canada's outlook on inflation for the
bank to consider more stimulus, Governor Stephen Poloz said on
Poloz told Bloomberg TV that some of the recent rise in bond
yields since the U.S. election of Donald Trump was built into
the central bank's expectations for a gradual normalization of
As for the possible impact on Canada from Trump, who has
pledged to renegotiate the North American Free Trade Agreement,
Poloz said the bank only incorporates announced policy decisions
into its outlook.
"There haven't been any of those, so for the time being, we
just have to wait and see like everyone else," he said, though
he noted the election rhetoric was a source of concern for the
bank and for business sentiment.
The Bank of Canada cut interest rates twice in 2015 in
response to the drop in crude prices that sent the Canadian
economy into a brief recession.
While the bank has kept rates at 0.5 percent since July
2015, Poloz roiled markets following the bank's October decision
by saying policymakers had considered cutting again.
Asked whether the economy would need to be considerably
weaker for the Bank of Canada to consider additional monetary
policy options, Poloz said the decision is framed around the
outlook for inflation.
The bank currently expects inflation will reach its target
of 2 percent on a sustainable basis around mid-2018.
"It would require for us to have a significant departure in
that outlook, such as we had from the oil price shock," Poloz
The bank is widely expected to hold rates steady when it
meets next week, though some think the market is too complacent
about the prospect of another cut.
Poloz said that some of the recent weak data was part of the
bank's expectation that fourth-quarter growth will slow after a
strong rebound in the third quarter.
"We should be aware of that pattern and not read too much
into it and see through it," he said.
Poloz's comments came ahead of a speech and press conference
he was scheduled to give later on Monday.
(Reporting by Leah Schnurr; Editing by Steve Orlofsky and