27 August 2018

They include higher debt level and Canada’s dependence on a trade sector.

According to him, the ongoing uncertainty over NAFTA and Donald Trump’s numerous threats to cancel the deal are already affecting investment in Canada.

“If you decide to invest, we talk about 5-10 years. And during the last year, companies have been telling us they are holding on for their investments or they even think about expanding their plant in Alabama, not in Canada,” – Poloz noted.

“Such decisions last for a long time, so we’ve already have a slowdown in investment just because of the uncertainty around NAFTA, it’s not a question whether it’s going to happen,” – he said.

CIBC economist Avery Shenfeld believes that with this uncertainty Poloz will likely wait for a NAFTA issue to resolve before raising rates next month.

Meanwhile, some specialists expect the BoC to make a move in September, as the inflation is growing and the economy shows strong performance.

“In case the issue is not resolved before September rate meeting, it will be not risky to wait until October,” – Shenfeld said.

Poloz noted that if the NAFTA deal is cancelled or edited not in favour of Canada, the Bank will need to see how the economy reacts to that before making any rate decisions.

At the same time, he sounded optimistic about an eventual deal signing.