The Bank of Canada can deliver more monetary stimulus if needed to meet its 2% inflation target as the economy recovers from the coronavirus crisis, Governor Stephen Poloz said on Tuesday.
The central bank has slashed its key interest rate three times to a record low 0.25% since the outbreak started and launched its first ever program of large-scale bond buying program to alleviate stress in financial markets.
The crisis, as well as plunging oil prices, drove the annual inflation rate in April into negative territory for the first time since 2009.
“We know that to bring inflation back to the target, it is necessary to stabilize the economy and then return economic output and employment to their potential,” Poloz told the Senate’s finance committee.
“If further monetary stimulus is required to meet our inflation targets, the bank has tools available to deliver that stimulus,” he said.
Poloz, making his last public appearance as governor before he retires next week, reiterated the central bank was prepared to increase the size of the programs it has introduced to support the smooth functioning of financial markets.