QUEBEC CITY: Interest rates will stay lower for longer, and businesses need to adjust expectations for return on investment or Canada risks not getting the productivity improvement it needs for growth, Bank of Canada Governor Stephen Poloz said on Tuesday.
In a speech outlining what low rates mean for businesses and governments, Poloz said it was obvious Canada's economy still faced strong headwinds and needed stimulative monetary policy to counteract them and move the country closer to full capacity.
"We also need to watch the full effects of the government's fiscal stimulus unfold," he said in a speech to economists in Quebec City that once again put the onus on government to stimulate the economy, given the already low level of official interest rates.
Poloz urged corporations to adjust the hurdle rate for new investments, saying investment has been weaker than expected because some firms aren't taking the low rate environment into account when deciding if an investment is worthwhile.
The governor said that while companies were uncertain about future demand prospects, they should not expect the kind of returns they could get before the financial crisis.
Comments
Comments are closed.