Poloz signals he disagrees with OECD on need to raise interest rates next year

OTTAWA – Bank of Canada governor Stephen Poloz says he doesn’t agree with the OECD that he needs to start raising interest rates by the end of next year.

The central banker says that while he respects the view of the Paris-based Organization for Economic Co-operation and Development,different forecasting organizations can use different approaches to predict future economic growth.

Poloz says the Bank of Canada’s thinking on the issue is based on its own view of the slack in the Canadian economy and the fact that inflation, at 1.1 per cent, is currently well below where he would like it to be.

Last month, Poloz surprised markets by dropping the central bank’s official tightening bias and moved to a more neutral stance, which signals that the bank is as likely to cut as to raise interest rates in the future.

Analysts interpreted the move as the bank telling markets it won’t likely start raising borrowing costs until the first or second quarter of 2015.

Markets reacted to that assessment by selling off the loonie.