Canada’s central bank governor says the economy needs more stimulus to recover from the lockdown prompted by the coronavirus pandemic.
In his final speech before stepping down next week, Bank of Canada Governor Stephen Poloz said Canada’s economy will continue to require significant amounts of stimulus in the rebuilding phase as lockdown measures ease.
Poloz also cited high debt levels and deflation as “financial vulnerabilities” moving forward. Canada’s central bank has taken unprecedented actions just to keep credit markets from seizing up over the past two months, cutting its benchmark interest rate to near zero, injecting more than $300 billion into financial markets and undertaking the central bank’s first foray into purchasing government debt.
Canada’s economy is now experiencing its sharpest contraction since the Great Depression with the unemployment rate at 13%. Poloz said the central bank’s efforts were primarily meant to ensure that financial markets continue to function properly.
The efforts seem to be working, with financial markets performing well even with the risk that near-term cash demands from governments may put renewed strain on the system, said Poloz.
He also said that policy makers will need to be “innovative and nimble” as they chart a future course and consider unwinding monetary stimulus in the coming months and years.
“I have every confidence that we will find our way back to prosperity here in Canada,” Poloz concluded.