28 October 2019

Oddly, the reason why it’s more difficult now to help the energy economy by cutting rates, is the fact that the oil and gas sector account for a decreasing share of the entire national economy. Now, as the Canadian dollar is closer to its real level, according to Poloz, the non-petroleum part of the economy has recovered, while in a slightly different way.

Reducing rates in attempt to support oil economies may lead to overheating the wider economy where the average core inflation is at 2.1%.

According to the latest polls by Reuters and Bloomberg, most economists don’t predict a rate cut on Wednesday or even this year. Meanwhile, the U.S. also makes the rate decision this week, and another rate cut is expected.

The main question for oil producing provinces is whether today’s global oil downturn is just a phase or it may transform into a long-term tendency, like many specialists believe.

Of course, new pipelines or new technology supported by tax cuts for the private sector may restart Canada’s energy sector, but it will definitely not happen before Wednesday’s rate meeting.