The central bank will keep its focus trained squarely on keeping inflation in check, Stephen Poloz said in his first public remarks since being named governor of the Bank of Canada.
Describing the bank's two per cent inflation target as "sacrosanct" the governor told a business audience at the Oakville, Ont., chamber of commerce that the bank hopes to work closely with business groups as he stickhandles monetary policy through a burgeoning recovery back onto solid ground.
"I am optimistic that the signs are there that the process is under way," Poloz said. "Right now, what we need most is stability and patience."
Poloz was named to head the bank on June 3, as previous governor Mark Carney was leaving to accept the top job at the Bank of England next month.
He praised consumers for doing their part in the early days of the recession for borrowing and spending enough that the Canadian economy rebounded. But now, he says, it's corporate Canada's turn to pick up the slack by spending on new technology and other productivity enhancers to stimulate the economy further.
"Given the circumstances, it was a good thing that households had the capacity to expand their spending — this provided the necessary cushion from the worst effects of the global contraction," Poloz said.
He maintained the bank's longstanding policy that targeting inflation in a certain range is the best way to keep Canada's economy healthy over the long term. "Even during the global economic and financial crisis, our commitment did not waver. The inflation target is sacrosanct to us and has become a credible anchor for the inflation expectations of Canadians."
He also said the time for borrowing by consumers is drawing to a close, but stayed well away from suggesting he plans on raising interest rates in the near future. Rather, consumers are reining in their borrowing naturally, he says.
"I am confident that this is exactly what people are doing," he said.
Poloz warned that the economy is still threatened by uncertainty abroad, namely the ongoing crisis in Europe and a U.S. economy that's still not where it used to be.
Canadian exports are at least $100 billion lower than would be expected at this time in Canada's recovery, he said.