AGL 40.25 Increased By ▲ 0.25 (0.63%)
AIRLINK 127.78 Increased By ▲ 0.74 (0.58%)
BOP 6.55 Decreased By ▼ -0.12 (-1.8%)
CNERGY 4.50 Decreased By ▼ -0.01 (-0.22%)
DCL 8.56 Increased By ▲ 0.01 (0.12%)
DFML 41.90 Increased By ▲ 0.46 (1.11%)
DGKC 87.20 Increased By ▲ 0.35 (0.4%)
FCCL 32.54 Increased By ▲ 0.26 (0.81%)
FFBL 64.95 Increased By ▲ 0.15 (0.23%)
FFL 10.22 Decreased By ▼ -0.03 (-0.29%)
HUBC 109.50 Decreased By ▼ -0.07 (-0.06%)
HUMNL 14.56 Decreased By ▼ -0.12 (-0.82%)
KEL 5.12 Increased By ▲ 0.07 (1.39%)
KOSM 7.55 Increased By ▲ 0.09 (1.21%)
MLCF 41.50 Increased By ▲ 0.12 (0.29%)
NBP 59.55 Decreased By ▼ -0.86 (-1.42%)
OGDC 194.00 Increased By ▲ 3.90 (2.05%)
PAEL 28.25 Increased By ▲ 0.42 (1.51%)
PIBTL 7.84 Increased By ▲ 0.01 (0.13%)
PPL 151.75 Increased By ▲ 1.69 (1.13%)
PRL 26.49 Decreased By ▼ -0.39 (-1.45%)
PTC 16.10 Increased By ▲ 0.03 (0.19%)
SEARL 82.28 Decreased By ▼ -3.72 (-4.33%)
TELE 7.62 Decreased By ▼ -0.09 (-1.17%)
TOMCL 35.40 Decreased By ▼ -0.01 (-0.03%)
TPLP 8.18 Increased By ▲ 0.06 (0.74%)
TREET 16.20 Decreased By ▼ -0.21 (-1.28%)
TRG 52.94 Decreased By ▼ -0.35 (-0.66%)
UNITY 26.50 Increased By ▲ 0.34 (1.3%)
WTL 1.25 Decreased By ▼ -0.01 (-0.79%)
BR100 9,951 Increased By 67.8 (0.69%)
BR30 30,875 Increased By 274.8 (0.9%)
KSE100 93,873 Increased By 517.5 (0.55%)
KSE30 29,085 Increased By 153.6 (0.53%)

Governments and central banks need a certain amount of coordination so they can discuss policies and consider the implications on debt levels and financial stability over the medium-term, Bank of Canada Governor Stephen Poloz said on Saturday. Poloz said one good example was Canada's 2 percent inflation target, which is jointly set between the federal government and the central bank, he said in a lecture to the Canadian Economics Association in Ottawa.
"Policy coordination around an agreed goal seems to hold out more promise than seeking some optimality condition," he said. Poloz said coordination was important since there were limits to how much government debt and private sector debt financial markets would tolerate. "A tight monetary/easy fiscal policy mix means a relatively slow accumulation of private sector debts and relatively rapid accumulation of fiscal debt. An easy monetary/tight fiscal policy mix would deliver the opposite dynamic," he said.
"Either dynamic can eventually give rise to financial stability risks," he said. "There is a meaningful trade-off in the policy space between the medium-term consequences for debt of monetary and fiscal policies." The governor made clear he was not urging governments or central banks to take any particular mix of policy actions, saying that depended on specific circumstances.
Poloz spoke against the backdrop of a Canadian economy that has been hamstrung by weak crude prices. The Bank of Canada - which cut interest rates twice last year to afford the economy some protection from slumping oil prices - hopes for a recovery lie with non-energy exports. But data released on Friday showed Canada ran a near-record trade deficit of C$2.94 billion in April.
During a question and answer session with the audience afterward, he said that while the economy was at a point where interest rate actions have a smaller effect, monetary policy is still providing support. He added that a decline in energy investment means that data are not yet showing investment that has been happening in other sectors of the economy and companies are close to feeling confident enough to start spending again. In a bid to boost growth, Finance Minister Bill Morneau unveiled a stimulus-rich budget in March, running up a deficit of nearly C$30 billion and pushing back the date when Ottawa expected to balance the books.

Copyright Reuters, 2016

Comments

Comments are closed.