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In an interview with the newspaper, Poloz said
the bank believes first-quarter economic growth could be weaker
than the 1.5 percent annualized rate bank anticipated in
January, but that second-quarter growth, in turn, would exceed
the bank’s identical 1.5 percent projection.
Poloz said the fourth-quarter gross domestic product report,
released earlier this week, cemented the bank’s view that the
oil-shock effects are working their way into the economy sooner
than the bank had expected.
Poloz said that this increasingly front-loaded appearance to the
oil shock makes an even stronger argument in favor of the bank's
decision to cut rates in January, rather than, using the January
rate decision to forewarn the markets of a cut that then could
have then followed in March.
"The more front-loaded it is, the more glad I am that we acted
right away, as opposed to waiting," he said.
He suggested that should the first-quarter numbers be
disappointing, his inclination would be to view that as an
"earlier" drag from oil, rather than a "bigger" drag.
He said that at some point in the second half of the year, the
improving momentum in the non-energy export side of the economy
should take over from the oil-related slowdown as the economy’s
dominant feature, and the overall theme should again be an
economy that is gradually closing its output gap. He noted that
the export-oriented side of the economy is growing at an
annualized rate of more than 5 percent, double the pace of the
overall economy in the fourth quarter.
But the timing of that “crossover” to non-energy exports taking
over the country’s economic driver’s seat remains in question,
he said.
"By the second half, all of the positives should be dominating,”
he said.
"When does the total show a stronger economy, as opposed to a
weakening economy? That’s the only question that’s left now."
(Reporting by Jeffrey Hodgson; Editing by Robert Birsel)
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