Stephen Poloz is doing his best to stay tight-lipped about his economic outlook at the moment. But what little he is saying speaks volumes about what's bothering him about Canada's uncertain economy, as it closes in on the halfway point of what has so far been a trying year.
The Bank of Canada Governor's press conference Thursday, in conjunction with the release of the central bank's twice-yearly Financial System Review, contained precious little for the pleading hordes hungry for new insight into how the country's oil-shocked economy is unfolding. Mr. Poloz bobbed and weaved around reporters' economic questions, while repeatedly stating that he's not making any new forecasts until the bank's next official outlook in its quarterly Monetary Policy Report in mid-July.
"We're at work now on the next forecast," he said. "I don't want to prejudge that. I'm just asking you to wait."
He actually said the "prejudge" thing twice, in case you missed it the first time. He even distanced himself from an assertion contained in the Financial System Review – "The Canadian economy is still expected to rebound in the coming quarters because of the anticipated strengthening of the U.S. economy and supportive financial conditions" – that looked a lot like a (non-specific) update of the bank's economic view.
"The comment in the report today is essentially meant to repeat what we said in the April MPR. It's not updated in the sense of a new forecast."
So that's about it. None of the creative metaphors for which Mr. Poloz has become famous. No strong, memorable statements for us to latch onto while we await the July update. My kingdom for an "atrocious."
Perhaps Mr. Poloz, having been occasionally burned in his two years at the Bank of Canada helm by being a bit too outspoken and imprecise in his public statements, has become reluctant to be led down dark alleys by wily questioners. His communications staff is almost certainly thankful, even if the media aren't.
But his reticence also reflects the reality that there's a lot of stuff we just can't read very well at the moment.
While he said the impact from the oil shock has so far been "reasonably localized" – mostly hitting things such as income, employment and housing in oil-intensive regions – he suggested there is another shoe to drop, as the longer-term fallout of lower oil-price levels as the new norm sinks into the energy industry and broader economy.
"It's only early days," he said. "We'll be monitoring this shock for some time."
More telling, though, was his characterization of Canada's non-energy international trade – which was supposed to be picking up steam to offset the big oil hit. He called it "disappointing" – and again, he said it not once, but twice. If you were going to hang your hat on a single word that Mr. Poloz said in this press conference, that has to be the one.
It's evident that as much as the oil shock's effects are a lingering cloud over the economy, the lack of offsetting strength from trade and other non-energy segments of the economy puts a big question mark on the central bank's economic outlook.
He said elements of the non-energy economy "still seem to be doing okay – we've got signs of growth in various parts of the economy. The question is, when do those things reassert themselves and become the dominant trend in the economy? We have to watch as things unfold in the second quarter and further down the road."
"Okay" is hardly a ringing endorsement. Compare that with Mr. Poloz's comments after the release of the April MPR, when he said, "Outside of the energy sector, other areas of the economy appear to be doing well," and his speech in Charlottetown in mid-May, when he said that those positive forces "continue to build."
Now, it can be a dangerous thing to read too much into specific word choices from this particular Bank of Canada governor, as he is notably less precise on such things as some of his predecessors and peers at other central banks. It's not by accident – for example, Mr. Poloz likes the central bank's eight-times-a-year interest rate statements to be written starting from a blank page each time, rather than the typical central bank tradition of repeating large swaths of text from statement to statement with only a few changed words and phrases. It's a bit off-putting to long-time central bank watchers, but with Mr. Poloz, the use of a new word doesn't always mean a shift in the message.
Still, he emphasized in the press conference that improving trade data "would be something we would look to to buttress that view that the positives are still gathering momentum." And with exports having declined in each of the first four months of the year (that's the latest data we have), that critical indicator isn't there.
Mr. Poloz isn't willing to publicly toss the bank's economic game plan out the window just yet. He still has another five weeks before he has to publish his new economic forecasts in the July MPR. But he and his colleagues may need all of that time to see whether the non-energy economy can rescue its economic outlook.
David Parkinson