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Canada’s central bank has laid out all its options to jump-start the Canadian economy in the wake of sinking oil prices, but it’s also painted itself into a corner as the dollar weakens, according to one of the most prominent figures in Canadian finance.
“Anything’s on the table,” said Sprott Asset Management CEO John Wilson, referring to extraordinary stimulus measures outlined by Bank of Canada governor Stephen Poloz earlier this month. But while the Bank is now open to the possibility of negative interest rates, Wilson told BNN that Poloz is facing a tough challenge because of a loonie that’s already been significantly weakened by two previous interest rate cuts and the tumbling price of crude.
“As a central bank, you can’t allow your dollar just to plummet, and that actually makes all Canadians less rich, if our dollar keeps going down,” said Wilson. “Personally, I’d like to see them, at some level, defend the dollar.”
While energy-dependent provinces in Western Canada are being battered by the steep correction in crude, Wilson noted the Bank of Canada may have reason to stand pat for the moment because Eastern Canada is benefiting from its exposure to the improving American economy.
“I think [the Bank of Canada] has a basis at least to stay where they are and hopefully, a year down the road, start to raise [rates],” said Wilson.