Disruptive technologies create new challenges for interest rate decisions: Poloz

Stephen Poloz said Canadians need not fear the new digital age

Disruptive technologies are making it harder to determine whether, and how quickly, to raise interest rates, the governor of the Bank of Canada said in a speech Thursday.

But Stephen Poloz said Canadians need not fear the new digital age and, in fact, he adds they are already benefiting from it, and embracing it.

“The technology is enabling growth everywhere, including in industries that have not traditionally been considered high tech,” Poloz told the Atlantic Provinces Economics Council and Greater Moncton Chamber of Commerce.

But Poloz said digital disruption, overall, is producing a positive impact on the economy.

He pointed to the computer system design sector as a prime example, noting it has grown by seven per cent annually over the past five years and now accounts for nearly two per cent of Canada’s economic output.

“To put this into context, the computer system design sector is already more important to the economy than the auto and aerospace sectors combined,” Poloz said in a speech that also noted the Canadian economy has fully recovered from the 2008 financial crisis and the 2014 oil-price collapse.

Canada also now has the world’s third-largest concentration of researchers in the field of artificial intelligence, he said, with foreign direct investment coming into the country increasingly skewed toward high tech.

Digital disruption is just as much a factor in deciding monetary policy as inflation and the ongoing concerns around global trade uncertainty, Poloz added.

But new digital technologies, in particular, could be giving the economy more room to grow before inflation pressures emerge, he said.

“Raising interest rates too quickly could choke off this economic growth unnecessarily,” the governor said, adding it makes monetary policy even more data dependent.

At the same time, uncertainty is no excuse for inaction in deciding whether to raise interest rates, Poloz said.

“What it does mean is that we will move rates toward a more neutral level gradually, continuously updating our judgement on these key issues in real time,” he said.

The Bank of Canada held its trend-setting interest rate at 1.5 per cent earlier this month but is widely expected to raise the rate at its next scheduled announcement on Oct. 24.

Terry Pedwell, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Lacombe Canadian Archery champion finishes 10th at worlds

Cameron Herbert has been a competitive archer for 10 years

Lacombe County: Do you have a gated property? Here’s what you need to know.

These gates are a deterrent for rural crime, they can also impede on emergency personnel

Lacombe Police Service joins North American rail-safety operation aimed at reducing preventable deaths and injuries on rail lines

Operation Clear Track aims to reduce the number of railway crossing and trespassing incident

WATCH: Enhanced Emergency Department opens at Lacombe Hospital

$3.1 million facility jointly funded by AHS, Lacombe Health Trust

Wetaskiwin RCMP investigate armed robbery

Wetaskiwin police seek identification of suspects

Blackfalds RCMP investigate fatal collision with cyclist on Highway 2

32-year-old male cyclist from Red Deer was pronounced dead at the scene

NDP, Liberals promise more spending, while Tories promise spending cuts

Making life more affordable for Canadians a focus in the 2019 election

Vaping-related illness confirmed in Ontario believed to be first in Canada

Middlesex-London Health Unit had no further details about the case — believed to be the first confirmed in Canada

Canadian stars Virtue, Moir say in video they’re ‘stepping away’ from ice dancing

The pair thank fans for their support in an emotional message

Outspoken Imperial Oil CEO Rich Kruger stepping down later this year

Imperial Oil is about 70 per cent owned by Texas-based Exxon Mobil Corp., since 2013

‘Time to take action:’ Children advocates call for national youth suicide strategy

Council wants Ottawa to make reporting of suicides and attempted suicides mandatory for data collection

Canadian inflation decelerates to 1.9% as gas prices weaken

August was the sixth straight month that price growth was 1.9 per cent or higher

Most Read