18 March 2014
“The current demographic situation shows that after the recovery economic growth will be slower than our historical tendency, and it will be connected with lower equilibrium rates of interest,” – noted Poloz in his recent interview.
The Canadian economy has tried to reach the necessary momentum since the 2008-2009 recession. As a result, the central bank has to keep its key lending rate at 1% since September 2010. At the previous BoC’s meeting Poloz said once again that the next move will depend on general economic data.
In Poloz’s opinion, the national economy was negatively affected by a global savings increase, caused by businesses’ reluctance to invest and deleveraging among banks and consumers. In addition to it, the economy suffered from demographic changes, as aging population reduces the demand for goods.
In other words, Stephen Poloz believes the possibility of secular stagnation should be viewed with all the seriousness.