U.S. President Donald Trump is creating headaches for a lot of foreign officials these days, Stephen Poloz included. The Bank of Canada governor could find his job even trickier in the next year, as the U.S. increases interest rates at a faster clip. The question for Poloz is whether to follow suit, and risk reining growth in too much, or hang back, which could result in downward pressure on the loonie. Either way, it could be challenging.
Both countries’ economies are growing but under Trump, the U.S. slashed corporate taxes and passed a US$1.3-trillion spending bill, which will juice the economy and make higher interest rates a given. The U.S. Federal Reserve already hiked once last week, and Canada has stood still.
Canada doesn’t have the same fires stoking its economy. GDP growth is slowing, oil prices haven’t recovered, and the housing market