Canadians must be prepared as ‘everyday volatility’ becomes the new norm: Poloz

Canadian employees and businesses will have to adapt to a more uncertain world where “everyday volatility” increasingly seems to be the new norm, says the former governor of the Bank of Canada.

In an interview with The West Block Guest host David Akin, Stephen Poloz, said the challenges facing many right now in high gas prices, declining housing affordability and unstable employment all reflect the realities of the life in a time marked by risk and uncertainty.

“These things are trending up,” Poloz said, pointing to factors like technological change, an aging population and income inequality that he says are contributing to “higher bouts of volatility.” .

“I think companies and their employees will have to prepare. Be more conservative, be prepared for more volatility like we see today, like oil prices or house prices or employment going up and down. That’s the kind of stuff, the daily volatility, that’s going to hit people. »

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Poloz has published a new book on the subject, titled The Next Era of Uncertainty: How the World Can Adapt to a Riskier Future.

Often, governments take on the role of protecting citizens from the impacts of high volatility, Poloz said, pointing to actions like those the federal government has taken during the COVID-19 pandemic.

But whether governments will be able to mitigate the effects of the volatility ahead is another matter entirely, Poloz suggested.

“I think it will be very difficult for traditional political tools to do that,” he said.

Russia’s invasion of Ukraine on Feb. 24 has rattled global markets, and uncertainty over the impact of tough Western sanctions on Russian exports such as oil and gas has driven prices higher in recent days.

Gasoline prices, in particular, rose sharply — topping $2 a liter in British Columbia’s Lower Mainland.

Poloz said he believed prices would come down soon, but uncertainty would persist.

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“High oil prices are usually their own cure, aren’t they? Because they destroy demand and it causes people to drive less, and also normally cause a supply response,” he said.

“I would be very surprised if we don’t see oil prices back down into the $100 range or below $100 before too long.”

Home prices are another source of uncertainty for many Canadians.

The pandemic has pushed demand to record highs and made housing out of reach for many. Others jumped into the market, fueled by enforced quarantine economies and record high interest rates.

However, real estate speculation and its role in today’s market is also a concern.

Poloz said it remains difficult to say how much of the fires in the markets is caused by speculation, and how much is simply the result of increased immigration and a growing population coupled with a lack of homes. available for purchase.

“Difficult to predict at this stage as these other fundamentals remain strong.”

© 2022 Global News, a division of Corus Entertainment Inc.

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