Stephen Poloz, Bank of Canada governor, speaks on resources and economy

“We can’t do much about resource price shocks”, Poloz said in the text of a speech he’s giving Monday in Calgary.

“We’ve adjusted to rising prices; we can adjust to falling ones”, Governor Poloz said.

That was a more upbeat verdict than delivered in the Bank of Canada’s June Financial System Review, when it said that “the transmission of economic and financial stress” from China and other emerging economies had a “medium” probability of occurring, and the effects on Canada, should such a risk materialize, would likely be “moderately severe”. “Doing so is the best contribution we can make to helping promote both strong, steady economic growth and the flexibility needed to ease those adjustments and help our resources-rich country thrive”. “In particular, our floating exchange rate helps absorb some of the impact of these price movements and it sends signals that facilitate future adjustments”.

“Oh my goodness”, said Poloz.

Stephen Poloz made the remarks Monday during a question-and-answer period that followed his speech in Calgary – in a province where the energy sector has been hit hard by the plunge in oil prices. “Over the years, Canadians have used our endowment to build a prosperous economy”.

The resource sector, he said, is still adjusting to the tougher conditions – a process he believes will take “considerable time”.

Since the global collapse in oil prices, Poloz and his policy council have twice slashed their key interest rate by a quarter point – the first coming in January and the other in July – taking the central bank’s trendsetting lending level to 0.5 per cent. The economy has become the biggest political issue ahead of the federal election. “Canada has seen this movie before”, he said.

“Without those investments (years ago), we would never have been able to capitalize on the higher prices, which boosted Canada’s aggregate income”.

The rush of investment in commodity production before the crash in prices wasn’t an error, and Canada has a long history of dealing with such swings, Poloz said.

None of the volatility, however, should deter Canadians from continuing to seek benefits from the country’s resources, Poloz said.