January 07, 2016

Q & A with Bank of Canada Governor: Low dollar is good for Canadian economy, so get used to the new reality

Brian LilleyArchive

The lower Canadian dollar is good for the Canadian economy and we need to get used to that fact - those sentiments seemed to be one of the central messages of a speech given by the Governor of the Bank of Canada. 

Speaking at a breakfast meeting of community leaders in Ottawa, Stephen Poloz said that the lower Canadian dollar, brought about in part due to the falling price of oil, is helping other parts of the economy.

"We have already seen stronger growth in exports of non-commodity goods such as machinery and equipment, furniture, pharmaceuticals, aerospace and electronics, to name a few," Poloz said sounding like an Ontario politician singing the praises of having a lower dollar. "This is helping to offset the weakness in the resource sector tied to lower commodity prices, but this natural process will take time to translate into more investment spending and new job creation."

In a question and answer session with the media afterwards, Poloz bristled when questioned by The Rebel, that he was cheerleading a lower dollar as helping for central Canada at the expense of Western Canada.

"It's not something to cheer for," Poloz said. "We would of course prefer oil prices to be a little higher because that is an important export for Canada."

But, the bank governor continued, there is little that he or anyone else can do about the price of oil and the price of oil and the value of the Canadian dollar look like "a pair of train tracks" lowering in value in tandem.

Poloz said the flexible exchange rate which has allowed the dollar to sink lower is an important shock absorber which allows the economy to buffer some of the impact of lower oil prices but is not a panacea which will fix what ails the Canadian economy.


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commented 2016-01-11 07:31:38 -0500
Greg time for a reality check. Canada has been exporting resources for over a hundred years. The low dollar allows our resource based industries to survive. Current metal prices if applied directly in US dollars to our mines in Canada would mean a significant number would stop producing. The cost of production is higher than the commodity price.
commented 2016-01-09 13:38:45 -0500
The only companies that are going to survive in Ontario are the ass-kissers who can negotiate subsidies to offset the crippling cost of electricity. That, in my books is corporate welfare. Unfortunately the only businesses who can afford the bribes to the Liberal party will be considered. Where are you leftist bastards going to get your tires changed or your take-out food or your teeth cleaned when all the small businesses are closed just to support your cronyism?
commented 2016-01-09 12:29:39 -0500
A low dollar is never good… A Country cannot devalue its way to prosperity. anybody that doesn’t understand that needs economics 101 and not the one that they teach at a university’s now. All international commodities are priced in US dollars (US hegemony) so the more they go up the more we suffer inflation and our dollars about $.70 right now. Right now Canada imports more than it exports leaving us in a deficit… That is too bad because we gave up our manufacturing base along time ago to the multinationals to take off shore because they weren’t satisfied with the profit here.. … When have you ever picked up a T-shirt now and it says made in Canada or anything else for that matter. The sickest part of this is that we have allowed Canada to become a resource-based country where we export raw product and import finished product. This is non-sustainable and if not fixed will bring about not only the collapse of our dollar and our economic system but the collapse of Canada as we know it now.
commented 2016-01-09 10:22:28 -0500
I have come to the conclusion that national or global economic forecasting has the same amount of accuracy and consistency as next year’s weather prophecy. Predictions are great, as long as they’re not concerned with the future.
commented 2016-01-09 03:33:13 -0500
If Trump is elected we are on the same collision path with our dollar as the Chinese and if he carried through with his remarks about the yuan we could also be in a lot of trouble.
commented 2016-01-08 22:44:57 -0500
Brian Allen-fair comment, however when you only have 1 customer , you can go broke or they will dictate the price. Look at Alberta ‘s Oil Industry! If you have 20 customers you can likely stay afloat until times improve. BC’s Forest Industry used to have 1 customer the US. Now they have 3 large Asian Markets and the US no longer dictates policies.
commented 2016-01-08 22:36:28 -0500
Brian Allen-fair comment, however when you only have 1 customer , you can go broke or they will dictate the price. Look at Alberta ’s Oil Industry! If you have 20 customers you can likely stay afloat until times improve.
commented 2016-01-08 20:55:02 -0500
Funny how ALberta has lost tens of thousands since NDP and Justin got in, must be more left wing magic, they do such a good job LMAO!
commented 2016-01-08 20:49:25 -0500
Andrew they lost over 38000 in one month and when Harper was in charge some months the only job losses were in Ontario , not Harpers fault. Of course you need to lie to yourself.
commented 2016-01-08 20:48:11 -0500
Andrew he did an awesome job, now oil is low and the dollar is low, that is what the lefties whined about and used as an excuse, so where is the big boost in Ontario? Oh yeah , that whining was pure and utter BS. And Ontario is not doing any better, they lose more than they gain. You are one lost person. What will you say next year? YOu will make up some other BS excuse like lefties do for everything.
commented 2016-01-08 20:35:48 -0500
“Did you ever notice how the low dollar and world collapse was Harper’s fault according to the Liberals last election? Now that it’s Trudeau in Ottawa it’s other external factors. The mainstream media is not only selectively reporting things but they actively skew the narrative to support the Liberals”

The difference is that Harper blatted endlessly about how great a job he was doing, even when that was clearly untrue. Trudeau? He’s barely been in power a few months, there’s very little he can do particularly in light of global circumstances (eg, you do know what happened in the Chinese stock market this week?

@bruce Kirk: Companies ARE investing in Ontario, which created tens of thousands of jobs in the last few months of 2015. Quebec, too. BC benefited as well and even perennial basket cases, Manitoba and the Maritimes eked out a bit of growth. China isn’t exponentially cheaper anymore … in fact, it’s hardly cheaper at all. That’s why their economy is collapsing. Nobody is outsourcing there anymore.
commented 2016-01-08 17:27:45 -0500
poloz is tilting at widmills if he thinks ‘new’ businesses are going to start up in Ontario or Quebec. Between prohibitively expensive union labour and electricity costs no serious business with even consider manufacturing in Canada. Couple that reality with a Chinese manufacturing sector that is hungry for more business and exponentially cheaper costs and poloz is just another talking head
commented 2016-01-08 17:13:22 -0500
+Bob Egli: …. They produce decent items but only drop them across the border instead of trying to sell to different parts of the world ….

“Dropping them across the border,” Dear Bob, is, already, “selling to most of the world.” Even notwithstanding that for the past seven years what presently passes as America’s “government” has been in the hands of the criminally insane, there’s still no better market.

Brian Richard Allen
commented 2016-01-08 17:08:42 -0500
The weak CDN dollar helps Canadian Manufacturers exporting to the US but much of the gain is offset by higher energy costs, wages and payroll taxes. Basically, an 85 cent CDN dollar is a break even proposition and presents no export advantage. A 70 cent CDN dollar is advantageous to those of us still operating in Ontario (and exporting) but it will not attract commensurate foreign investment in Ontario’s manufacturing industry. Example electricity is 16.5 cents a KWH in Ontario and 4.5 cents in Buffalo. Generally speaking, Ontario’s business climate is no longer attractive for manufacturing.
For those of us who purchase raw materials that are pegged to the US dollar it becomes more difficult to survive selling in CDN dollars to domestic customers as price increases are difficult to pass on. We are already seeing this in retail prices across all commodities.
Capital investment is now 40% more expensive as most equipment and components are US sourced.
Mr. Poloz understands this, and while he seems delighted that some new companies have started up he is very cautious about banking on a wholesale run of US backed startups in 2016.
Now that our dollar is at 70 cents US it makes a solid business case for Canadian companies to export, not just to capitalize short-term on the FX advantage but to back fill our eroding Customer Revenue base in Canada with US customers.
US manufacturing customers that once operated in Canada.
There are success stories of high tech manufacturing companies moving to Ontario in 2015 but they will not address the middle to low skilled jobs that have disappeared, largely to the US.
We created fewer jobs Canada in all of 2015 than the US has created in any single month.
We may not be able to control the Global attractiveness of the US dollar but we can effect the changes that put Ontario back in business. It starts with everyone’s voice directed at Queen’s Park, demanding real job creation in the business of making things again.
commented 2016-01-08 16:51:29 -0500
Bafflegab. The last time the dollar was low, companies made lots of money but productivity remained low because they didn’t invest in new machinery and processes. Why? Because they were operating under the assumption of “I’m all right, Jack” or they couldn’t import new machinery because the dollar was so low. This pure BS, because the low dollar hurts those that are poor, or on a fixed income when they purchase imported goods that are not made or grown in Canada. I have lost some respect for this guy. He sounds like he’s reading off Wynne’s crib sheets.
commented 2016-01-08 14:08:36 -0500
Kevin – let’s see your qualifications for making such a stupid statement.
commented 2016-01-08 13:53:33 -0500
You guys are so barf worthy. I will take on any of your bloggers on any topic.
commented 2016-01-08 11:16:03 -0500
Before the election, I stated that if PM Harper was not reelected with a majority, that we would rue the day. Well hold on to your hats folks, doomsday has arrived, under the guise of a simpleton, and his henchmen wrecking crew, that haven’t got a clue how to run an economy, except into the ground, as they steal all they can from us.
commented 2016-01-08 11:07:26 -0500
Question said: “Did you ever notice how the low dollar and world collapse was Harper’s fault according to the Liberals last election? Now that it’s Trudeau in Ottawa it’s other external factors. The mainstream media is not only selectively reporting things but they actively skew the narrative to support the Liberals.”
I was saying something similar to my wife yesterday: It’s funny how the media was condemning the Conservatives last spring for a possible short-fall of a billion dollars (that ended up being a 1.5 billion surplus or something like that) but they don’t say anything negative about the mega billions the Lieberals are gonna blow!!
commented 2016-01-07 23:53:45 -0500
Poloz painted himself into a corner. Interest rates should have been at at least 1% , so he would have had room to lower them. All this is about is about Ontario workers being able to compete with other workers in the world. Their production levels are so low, it is doubtful if they could compete with Haiti let alone US workers. The workers are only part of the problem:
1. Gigantic Provincial Government-a beast that needs tons of tax dollars to feed.
2.Bad Private Management-They produce decent items ,but only drop them accross the border instead of trying to sell to different parts of the world.
3.Bad Goverment Policies-electricity rates etc..
4. Big Company Unions that make rules that slow down productivity
A 60cent dollar plus our Health Care System,a10cent a dollar advantage over an American Company makes it a 50cent on each dollar headstart over a US worker. These are the reasons why Poloz and Central Canada like low Oil prices and a low Dollar. Ont. and Que. can compete.
commented 2016-01-07 22:50:22 -0500
To Justin’s diary writer, maybe it’s late or I am tired and old ,but sometimes when I read your postings I break down and laff uncontrolably. Don’t stop ,save them for a time when you can point out the parallel universe that’s all ready happening.
commented 2016-01-07 21:45:06 -0500
The cloud that is the low dollar really doesn’t have that much of a silver lining. Right now the non commodity export growth is about all we bloody well have. If commodity prices weren’t so bad, a dollar that wasn’t too close to the U.S.dollar would definitely be boosting exports and be more of a silver lining. As it is it all just sucks .
commented 2016-01-07 21:19:27 -0500
A low dollar is a massive tax on all Canadians.
commented 2016-01-07 20:54:53 -0500
The Dollar will continue to fall, as soon as the Financial Institutions realize what we have as a Leader.
commented 2016-01-07 20:19:03 -0500
“What a load of bull. All you’re doing in turning some people into slaves and bankrupting others.”

It seems eerily similar to a time in the 80s when Justin’s daddy was running Canada (into the ground). Brings back wonderful memories … not. I wonder if this time, seeing that history is in repeat mode, if we will be facing 20%+ mortgage rates in the near future or will it be worse this time around.
commented 2016-01-07 20:12:20 -0500
Yeah, a new reality of unbounded poverty!
commented 2016-01-07 20:06:59 -0500
Oh really, hows that working for Mexico? Does anyone want to live in a frozen Mexico?
commented 2016-01-07 19:56:41 -0500
Did you ever notice how the low dollar and world collapse was Harper’s fault according to the Liberals last election? Now that it’s Trudeau in Ottawa it’s other external factors. The mainstream media is not only selectively reporting things but they actively skew the narrative to support the Liberals.

Have you ever tried commenting on CTV for example? The comments are strictly governed to a few anti-Trudeau sentiments that are quickly followed by multiple comments supporting Trudeau. Often the ‘cyber bullying’ left wing shills get multiple comments to brow beat any conservative commenter. A few of the names you will see with multiple pro-Trudeau comments are BitBud, Johnny B, theTruth81, etc. Of all of them BitBud can get up to 20 or 30 postings on one article.

One is left to consider, "Are these really average readers commenting or are they actually CTV editors that set up accounts to assail the reading public with misdirection and cyber bullying?

Thank goodness for theRebel ! Here everyone gets a fair chance at commenting. The mainstream media is becoming more obtuse, partisan and intransigent every day. Ezra is right when he says that the mainstream media will ignore everything and just dig their heels in deeper at every turn. Look at the handling of the rape crisis in Germany.

All the mainstream media are the same! The media party is a very apt name for them.

So, for the truth about what’s going on in Canada concerning the economy, Syrians, etc. my money is on theRebel for accuracy in reporting.
commented 2016-01-07 19:52:26 -0500
JUSTIN’S DIARY, ‘I shall sleep tonight dreaming of Gerald and my vessel being filled.’ You Kill me – I fell of my chair laughing so hard. Is Gerald filling his vessel or is he filling Gerald’s vessel. Maybe a mutual thing.
But I digress, you make me laugh so hard. Thank You.