The governor of the Bank of Canada told MPs in Ottawa on Tuesday that while recent economic data have been encouraging, they have also been "quite variable."
"The global economy retains the capacity to disappoint further," Steven Poloz said during testimony before the House of Commons finance committee.
In his comments Tuesday, Poloz reiterated the forecast delivered by the bank last week that sees real GDP growth of 1.7 per cent this year, 2.3 per cent next year and two per cent in 2018.
"It is always tricky to estimate an economy's potential output, and the difficulty is compounded when the economy is going through a major structural adjustment, as Canada is right now," Poloz said
"We know that the collapse in investment in the commodity sector will mean a slowdown in the economy's potential growth rate," which has been reduced from 1.8 per cent to 1.5 per cent, he said.
Rate change unlikely: TD
TD Bank economist Brian DePratto said the testimony reinforces that caution seems to have become the Bank of Canada's guiding principal.
"Uncertainty surrounding impacts of fiscal measures, alongside the ongoing economic rebalancing, point to a Bank of Canada that is unlikely to move interest rates any time soon," DePratto said in a commentary.
Last week, the central bank left its key interest rate unchanged at 0.5 per cent.
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