Bank of Canada Governor Stephen Poloz said Thursday that uncertainty surrounding the North American Free Trade Agreement (NAFTA) is hurting business investment within Canada.
Governor Poloz made the comments in a televised interview with Global News. He said that the main reason companies are keeping their profits in their pockets and hesitating to invest is the uncertainty around the current renegotiation of NAFTA between Canada, the U.S. and Mexico. He added that pipeline disputes are also making companies skittish when it comes to investing.
“Companies are reluctant to invest, whether they are in the oil sector or other sectors if they depend on trade,” said the central bank head, adding that even companies that are investing would invest a lot more if the uncertainty around trade was lifted.
NAFTA negotiations continued in Washington this week with the hope that an agreement will be reached prior to the campaigning period for the presidential election in Mexico on July 1 and U.S. congressional elections in November.
Governor Poloz also said in the TV interview that higher interest rates will be warranted over time given that the economy is 50% more sensitive to interest rates today.
