He added: “Even when prices are falling, as they have been recently, our endowment represents a store of value and a source of future riches”.
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Poloz repeated that the bank would “look through” temporary upward pressure on core inflation that results from a lower currency boosting import prices.
The fundamental forces of supply and demand, along with constant technological progress, drive long-term cycles in resource prices, Governor Poloz said.
Energy advanced 1.66 percent, following a rally in oil prices on Monday, with the light, sweet crude for October delivery up 2 US dollars to settle at 46.68 USA dollars a barrel on the New York Mercantile Exchange.
He reminded the audience of about 1600 that the Canadian economy has benefited in recent years from rising prices and says “we shouldn’t ignore the resources that we have been blessed with”. Forecasters, however, have predicted the economy will improve in the last half of the year.
Business leaders in the oil industry told the central bank earlier this year they would be cutting investments by about 40 per cent because of the steep price drop, which has not recovered as quickly as anticipated, Poloz said.
A report issued by TD Bank on Monday showed, “over the longer-term, export growth is expected to moderate somewhat, but remain supportive of growth, helped by a loonie (nickname for the Canadian dollar) that remains at or below 85 USA cents”.
Statistics Canada will release official GDP numbers for July on September 30.
Most economists had already acknowledged Alberta is in a recession, as well as Newfoundland and Labrador and perhaps Saskatchewan, with those resources-dependent provinces being hardest hit by the oil plunge.
In a speech at Calgary Economic Development’s 2016 Economic Outlook event, Poloz said that the Canadian economy is able to deal with the challenges posed by large movements in resource prices.
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Poloz adds it’s not just oil which can fluctuate at such a dramatic point, stating the price of copper, which has tripled, as well as the price of nickel, which doubled in a two year span in the late 2000′s.
