The Bank of Canada's new governor says the central bank has no plans to raise interest rates given the current economic environment.
Tiff Macklem, who recently replaced outgoing governor Stephen Poloz, said Tuesday that the Bank of Canada intends to keep interest rates at current lows for the foreseeable future to support an economic recovery from the coronavirus pandemic.
Canada’s central bank has dropped its key interest rate to 0.25%, which it says is as low as it can go and instituted an unprecedented bond purchasing program to ease credit flows in financial markets. Macklem said interest rates will only go up once Canada is firmly into an economic recovery.
Macklem made the comments during his first appearance as Bank of Canada governor before the House of Commons Finance Committee -- his first public statement since taking the top job at the central bank on June 3.
"Someday we will get through this, the economy will be recovered, and interest rates will start to move back to more normal levels," Macklem told the committee. "But we're in a deep hole, and it's going to be a long way out of this hole."
During his appearance, Macklem said the bank's focus in the initial weeks of the crisis was on restoring orderly market conditions, efforts that seem to be paying off with conditions normalizing.
He added that the bank is now turning its focus to the future path of monetary policy, with an important step to be taken next month with the publication of an economic outlook.
The bank's July Monetary Policy Report will likely again provide best- and worst-case scenarios for the economy rather than hard figures for gross domestic product and inflation because of the unknown course of the pandemic, Macklem said.
The central bank governor also said he expects to see growth in the third quarter of this year given the 290,000 jobs recorded in May, as well as more people looking for work and more Canadians starting to work regular hours.
"I think we could see some good numbers (in the third quarter), but I would stress that even the good case is still pretty bad," Macklem said.
