Bank of Canada governor Stephen Poloz says Canadians should expect cheap borrowing costs to last for years even after he finally gets around to hiking interest rates.
The central banker told a business group in Saskatoon that the Canadian economy has room to grow but even when it returns to full capacity, likely sometime in early 2016, it won't take a big adjustment in interest rates to keep inflation in check.
Poloz says that the consensus is that interest rates will remain lower than historical levels â€” a so-called new norm â€” even when the economy is back firing on all cylinders.
The Bank of Canada has not budged on interest rates for almost four years, maintaining the trendsetting overnight rate at one per cent since September 2010.
Meanwhile, Poloz says that although Western Canada has been the main beneficiary of the commodities boom and higher oil prices, all Canadians have benefited to some extend through higher average incomes.
He says the bank's research has calculated that Canada's gross domestic income is about seven per cent higher today than it would have been without the improvement in terms of trade brought on by resource exports since 2002.