(Reuters) - The effects of U.S. steel and aluminum tariffs and tighter mortgage rules will “figure prominently” in the Bank of Canada’s July decision on interest rates, Governor Stephen Poloz said on Wednesday.
In a speech promising increased transparency from the central bank in an age of economic uncertainty, Poloz said there is “a litany of things we simply do not know” these days, which is why the bank is “particularly data-dependent” right now.
With the next rate decision set for July 11, Poloz said the bank is working to incorporate in its projections the effects of the U.S. metals tariffs, along with retaliatory measures, as well as trying to understand how recent moves to tighten mortgage lending, dubbed B-20 guidelines, are affecting the housing market.
“We expect these issues to figure prominently in our upcoming deliberations,” Poloz said in a speech to the Greater Victoria Chamber of Commerce. “We cannot mechanically follow the rate path provided by our models because there is simply too much uncertainty in the world.”
The degree to which uncertainty about trade policy is holding back business investment is unclear, as is how sensitive the economy is to higher interest rates given high household debt levels, Poloz said.
Reporting by Andrea Hopkins and Dale Smith
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