Integrating economies through trade affects monetary policy, Governor Poloz says

September 30, 2016

Economies around the world have become more integrated because of increased trade, and this has implications for the conduct of monetary policy, Bank of Canada Governor Stephen S. Poloz said today.

In the first annual Paul Storer Memorial Lecture on Canada–US relations, given at Western Washington University, Governor Poloz said that the evolution of international trade practices, such as building global value chains and establishing foreign affiliates, suggests that economies are becoming more integrated.

There is “evidence of increased trade integration when the definition of trade is broadened to embrace all the dimensions of international business,” Governor Poloz noted. This evidence “is sufficient for monetary policy to take it seriously.”

Increasing integration has been driven not only by pacts such as the North American Free Trade Agreement but also by the rising trade penetration of emerging markets, particularly China, through the development of global supply chains, Governor Poloz said.

This has been excerpted from a 26 September 2016 press release by the Bank of Canada and is available in its entirety at:
http://www.bankofcanada.ca/2016/09/integrating-economies-through-trade-affects-monetary/


Topic(s): 
Canadian Economy & Politics
Information Source: 
Canadian News Channel
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