Bank of Canada governor Stephen Poloz is speaking in Ottawa today about the impact of the bank's recent rate cuts given the U.S. central bank is raising rates.
In a speech organized by the city's Chamber of Commerce that's called "Life After Liftoff: Divergence and U.S. Monetary Policy Normalization," Poloz will tell business leaders about the bank's view on the economy, given the recent turbulence.
Canada twice cut its benchmark interest rate in 2015 in an attempt to stimulate the economy. The U.S., meanwhile, finally hiked its rate in December after six years at record lows.
Normally, the two countries have monetary policies that move in broadly similar directions. But the U.S. hiking of rate as Canada cuts them — a phenomenon known as "divergence" — could have unexpected consequences.
At least one economist expects Poloz to take a much more gloomy tone than he has in recent pronouncements.
Stephen Poloz cut the Bank of Canada's benchmark interest rate twice last year.
"The cautious optimism about the economy displayed late last year could be taken down a notch or three in light of recent financial market developments and softer data on both sides of the border," BMO economist Sal Guatieri said early Thursday.
"If the bank is even thinking of cutting rates on Jan. 20, now is the time to at least hint of the possibility (and not surprise pundits like a year ago)," Guatieri added.
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