VANCOUVER, March 21 The Bank of Canada remains
concerned about tepid business investment, a key official said
on Tuesday, adding it is too early to assume the worst of
underperformance is over despite stronger-than-expected economic
Deputy Governor Lawrence Schembri said sluggish business
investment and a shift towards protectionist trade policies in
the United States are the two biggest downside risks to the
bank's inflation outlook, reiterating that material slack
remains in Canada.
While fourth-quarter GDP data came in "somewhat stronger"
than the bank anticipated in January, Schembri highlighted the
divergence in both growth and monetary policy between Canada and
the United States, where "U.S. authorities have now begun to
tighten" interest rates.
"While the headline (GDP) number is welcome news, a more
detailed analysis suggests continued scope for caution. Exports
continue to face ongoing competitiveness challenges," Schembri
said in prepared remarks to the Greater Vancouver Board of
"Although the Canadian economy has made good progress
adjusting to the oil price shock, material slack in our economy
remains, in contrast to the U.S. economy, which is approaching
its productive capacity," he added.
(Reporting by Andrea Hopkins; Editing by Chizu Nomiyama)