Bank of Canada Governor Stephen Poloz in an exclusive interview with CBC talked about Inflation, Deflation, Dollar Equation, Exporters & Manufacturers, Key Interest Rate and consumers.

Poloz is concerned about the deflation as it would result in falling wages

He said exporters are behind of BoC expectation and manufacturers are losing global market shares

Poloz welcomes strengthening American economy as one of the catalysts for such a maneuver and they need to see economic data improvement to be able to increase the Key Interest Rate otherwise it would be on hold at where it is as he believes higher rates would have a Negative Impact on highly indebted Canadian consumers

Poloz’s comments follow controversial remarks by Canada’s finance minister Jim Flaherty on Sunday “suggesting there would be pressure to raise interest rates in 2014” but Poloz is not worried of international calls for rate hikes and his decisions would be based on Canadian economic factors. In November, he disagreed with the OECD’s assessment that rate hikes could start in 2014.

Bank of Canada’s governor said on Tuesday there would be upward pressure on rates this year, but he referred specifically to long-term market rates (Fixed Rates), not the rate set by the central bank
“So as a tapering occurs we might expect to see, as we saw in the summer, some increases in long-term rates, (although) most of it seems to be priced in,” Poloz said.

Adjusting the central bank’s target for the overnight rate, on the other hand, is a tool that is available “but we have to consider in the broader context what impact would it have,” he said.

“Would it be the same size impact we normally would expect? Probably not, given the situation,” he said, referring to the record high household debt-to-income ratio and a situation that he called “fragile from a consumer point of view.”

You can click on the video below to watch it.