Bank of Canada: firms must boost investment or lose to U.S. rivals - Reuters

https://ift.tt/3o6yaFi

OTTAWA, Feb 9 (Reuters) - Canada's economy does not need more stimulus, but rather more investment from both government and businesses to build up supply capacity to meet strong consumer demand, Bank of Canada Governor Tiff Macklem said on Wednesday.

Macklem, when asked in an audience Q&A session if government should be spending billions to further stimulate the economy, said Canada is already in the midst of a consumer-led recovery, and more capacity investment is needed to sustain that.

"To sustain a strong consumer-led recovery, you need investment," he said. "Whether it's businesses or governments, what we need is more focus on building that supply capacity."

Register now for FREE unlimited access to Reuters.com

"Demand is now looking self-sustaining," he added.

Canadian Prime Minister Justin Trudeau, during his election campaign last year, pledged C$78 billion ($62 billion) in new spending over five years to foster Canada's economic rebound.

Earlier, Macklem told the business audience that Canadian firms must follow through with business investment plans or risk losing out to competitors south of the border.

Corporate balance sheets are strong, consumer demand is high and U.S. demand for Canadian exports is rising, with investment intentions among firms at their highest level since 1999, Macklem said.

"It's imperative that businesses in Canada follow through on these plans or risk losing out to U.S. competitors," he said. "For the economy as a whole, investment is critical to non-inflationary growth."

The Canadian dollar was trading 0.3% higher at 1.2675 to the greenback, or 78.90 U.S. cents.

Macklem also reiterated interest rates must rise to combat "too high" inflation. The central bank signaled last month it would soon start hiking rates, saying the economy no longer needed pandemic-level supports. read more

Despite a stronger rebound in employment than seen in the United States, Canada's productivity growth continues to lag. This is both due to more public health restrictions and lower business investment, said Macklem.

"The question is, does COVID-19 provide us with an opportunity to change our course? I believe it does," said Macklem, pointing to the pandemic-driven rise in digital investments and remote work.

The Bank of Canada is expected to hike its overnight interest rate to 0.50% in March, from a current record low 0.25%, with money markets betting on six increases in total this year. BOCWATCH

($1 = 1.2669 Canadian dollars)

Register now for FREE unlimited access to Reuters.com

Reporting by Julie Gordon and David Ljunggren in Ottawa, additional reporting by Fergal Smith in Toronto; Editing by Alex Richardson, Kirsten Donovan

Our Standards: The Thomson Reuters Trust Principles.

Adblock test (Why?)

"lose" - Google News
February 10, 2022 at 12:28AM
https://ift.tt/7vpkUFL

Bank of Canada: firms must boost investment or lose to U.S. rivals - Reuters
"lose" - Google News
https://ift.tt/9c8gxwZ https://ift.tt/3o6yaFi

Bagikan Berita Ini