BoC won’t speculate on impact of NAFTA talks

OTTAWA — The governor of the Bank of Canada says that to avoid fuelling speculation, the central bank is resisting any in-depth study of what the sudden death of the North America Free Trade Agreement could mean for the Canadian economy.

Stephen Poloz says the bank would itself be engaging in speculation about what would happen if the deal collapsed.

Analysts at the bank intend to wait until there is something firm – namely if and when Congress grants any request by U.S. President Donald Trump to terminate NAFTA – before outlining how such a move would impact Canadian businesses and the wider economy.

“We have not analyzed this for one important reason: we simply don’t want to be making statements about the consequences and so on when we’re in the midst of some important and sensitive negotiations between governments,” Poloz said Wednesday during an appearance at the Senate’s banking committee.

The uncertainty around NAFTA played into the bank’s latest expectations for the Canadian economy. In a report last month, the central bank forecasted Canada’s economy would expand over the next two years, but not as much in 2019 as had previously been predicted.

Senators were told that businesses are scaling back their investment plans as a result of the uncertainty around NAFTA talks, which ended on a sour note after the latest round of negotiations showed all sides seem to be far apart.

The forecasts don’t take into account a change in free trade rules or Trump’s tax plan, Poloz said.