I wouldn't, but he might

We now have to hand all of the economic data that the Bank of Canada will consider as it makes its next rate decision, with the announcement due on September 9. On balance, the recent numbers suggest that the Bank probably shouldn't see any need to cut rates again.  Consider:

• As noted in a previous post, the Canadian economy was in a "technical recession" in the first half of this year. However, monthly GDP data showed the economy returning to positive growth in June, and most forecasters expect a slow expansion to continue through the second half of the year and into 2016.

• Trade data released on Thursday were generally encouraging, with exports rising 2.3 percent in the month. For the first time in many years, automotive-related exports exceeded oil shipments, offering at least a glimmer of hope that the sharp depreciation in the exchange rate might be having some impact.

• Employment data for August, released this morning, were also largely positive. The headline number of jobs added, just 12,000, was unspectacular, but the month saw more than 50,000 full-time positions created, offset by a smaller number of part-time jobs lost. The unemployment rate ticked higher, but this reflected a rise in the participation rate, something that is generally interpreted as a sign of improving confidence. As an aside, employment is generally a lagging indicator of overall economic activity. If the economy was indeed in recession earlier this year, one might expect that employment would be falling now -- and it isn't. This may mean that revisions to GDP data will eventually reveal that the recession never happened.

Taking all of these numbers together, and considering the almost unanimous forecaster consensus that growth will continue, it seems likely that the Bank of Canada will opt to keep rates at their current level (0.50%) this month. Of course, Governor Poloz has made a habit of surprising markets this year.  If he's tempted to do so again this week, he might want to pause and consider whether a further rate cut would even be effective.

The goal of cutting rates is, of course, to drive the currency lower, in hopes of boosting non-oil exports.  This report from TD Economics persuasively argues that exchange rate manipulation is no longer very effective as a way of increasing export volumes.  I've been saying that for some time, but it's good to see it spelled out in an authoritative report like this. I hope Governor Poloz slips a copy into his briefcase for some light reading over the Labour Day weekend.