Rate hike expectations C rise as Poloz reiterates cuts have done their

OTTAWA — With the Bank of Canada nearing its next policy decision, expectations of an interest-rate hike increased Wednesday after governor Stephen Poloz reiterated that his 2015 cuts appeared to have done their job.Poloz made the comments in an interview broadcast on business news channel CNBC. He noted the Canadian economy enjoyed “surprisingly” strong growth in the first three months of 2017 and he expected the pace to stay above potential.The Canadian dollar climbed to a four-month high of 76.44 cents US after Poloz’s comments, which fed speculation about a rate increase as early as its next scheduled announcement in two weeks. The boost lifted the loonie from an average price of 75.83 cents US on Tuesday.If the central bank increases its key rate, the big Canadian banks are expected to raise their prime rates, driving up the cost of variable rate mortgages, other loans and lines of credit tied to the benchmark rate.Poloz credited the two rate cuts introduced by the bank in 2015 for helping the economy counteract the effects of the oil-price slump, which began in late 2014. The reductions also helped increase the speed of the adjustment, Poloz added.“It does look as though those cuts have done their job,” said Poloz, who was in Portugal on Wednesday to participate in a forum hosted by the European Central Bank.“But we’re just approaching a new interest rate decision so I don’t want to prejudge. But certainly we need to be at least considering that whole situation now that the capacity, excess capacity, is being used up steadily.”Later Wednesday, deputy governor Lynn Patterson echoed Poloz in a Calgary speech, stating that the rate cuts had “helped to facilitate the economy’s adjustment to the oil-price shock.”Patterson then added: “the economic drag from lower prices is largely behind us.”In recent weeks, a shift toward more “hawkish” statements by Poloz and the bank’s senior deputy governor, Carolyn Wilkins, suggested the bank was moving closer to its first rate increase in nearly seven years. Poloz stated earlier this month that his 2015 rate cuts had done their jobs.Still, a softer-than-expected inflation report last Friday led some analysts to believe the bank might wait until the fall or later before introducing a rate increase. Inflation was once again below the bank’s target of two per cent.But economists interpreted the fresh remarks Wednesday as signals the bank has not backed away from its view, even after the inflation numbers came out. Many believe it may be preparing to raise the benchmark as early as its July 12 announcement.“They’ve made it clear that they’re ready to move,” said BMO’s Benjamin Reitzes, who added that before Poloz’s latest comments his bank was predicting an autumn rate hike.“We’re now calling for a rate increase in July.”Reitzes said Poloz’s comments indicate the governor is “comfortable” with oil in its current range of USD$40 to USD$50 per barrel.Desjardins senior economist Jimmy Jean wrote: “This does not sound like a central banker who was profoundly shaken by the weaker-than-expected (consumer price index) numbers of last Friday.”On Friday, Statistics Canada will release a key batch of data for analysts to chew on: gross domestic product numbers for April.The bank lowered its rate twice in 2015 to the very low level of 0.5 per cent to help offset the effects of the oil-price shock.Poloz said the drop in oil prices set Canada’s economy back — causing the central bank to compensate by lowering interest rates — but that growth has rebounded with an “encouraging” pace in recent months.While he said he expects growth to moderate to a more normal level, he predicted it would remain “above potential.”Poloz, who participated in a panel with Bank of England governor Mark Carney, European Central Bank president Mario Draghi and Bank of Japan governor Haruhiko Kuroda, also said virtually every major area of the world seems to be gaining economic momentum — with the United States “way out in front.”Follow @AndyBlatchford on Twitter. read more

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South Korea prosecutors to question ousted leader next week

South Korea prosecutors to question ousted leader next week Supporters of ousted South Korean President Park Geun-hye lay down the roadside to prevent the passage of media vehicles near the her private home in Seoul, South Korea, Tuesday, March 14, 2017. South Korea’s acting leader on Tuesday turned down the resignation offers made by senior advisers to Park. (Go Sung-min/Newsis via AP) by Hyung-Jin Kim, The Associated Press Posted Mar 13, 2017 8:16 pm MDT Last Updated Mar 15, 2017 at 2:00 am MDT AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email SEOUL, South Korea – South Korean prosecutors said Wednesday they plan to question ousted President Park Geun-hye next week over a corruption scandal that removed her from office, as the government announced that an election will be held on May 9 to pick her successor.Park lost her presidential immunity from prosecution after the constitutional Court ruled Friday to formally end her rule over allegations that she colluded with a longtime confidante to extort money from businesses and allowed her pull government strings from the shadows.Prosecutors said they told Park’s lawyer that they’ll summon her next Tuesday as a suspect in the scandal. Park’s lawyer later said Park would “faithfully” undergo the questioning, according to a Seoul prosecutors’ office.Dozens of high-profile figures including some top Park administration officials and Samsung heir Lee Jae-yong have already been indicted over the scandal.Park could also face extortion, bribery and other criminal charges, but she has denied any legal wrongdoing and expressed defiance toward her corruption allegations.“Although it will take time, I believe the truth will certainly come out,” Park said after leaving the presidential Blue House on Sunday.Park’s comments raised worries about a further deepening of the national divide over her fate. Three people died and dozens were injured in violent clashes between Park’s supporters and police following Friday’s court ruling.By law, a national vote to find her successor must be held within two months of Friday’s court ruling, and the Ministry of Interior said Wednesday that May 9 would be the election date.Moon Jae-in, a liberal opposition leader who lost the 2012 presidential election to Park, is the favourite to be the country’s next leader in opinion surveys.His campaign got a boost Wednesday when Prime Minister and acting leader Hwang Kyo-ahn, considered the potential leading conservative challenger to Moon, said he won’t run.Hwang told a Cabinet meeting that he decided to focus on managing state affairs and resolving political and economic uncertainties triggered by Park’s ouster until a new president is elected. Hwang would have been forced to resign and let a deputy prime minister serve as another interim leader if he had stood for the election.South Korean conservatives have been badly hurt by Park’s scandal. In early February, former U.N. Secretary-General Ban Ki-moon, also regarded as a conservative candidate, withdrew from consideration amid mounting media speculation over his political competence and corruption allegations. read more

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