Bank of Canada Commentary

 

7th November 2017

 

BOC Governor Poloz says closer economy gets to full output and employment, the greater the risk inflation pressures will appear

 

- Cautious in making future rate changes, economy is likely to require less monetary stimulus

- There is a link between slack in the labour market and wages, over time expected to lead to pickup in wage growth

 

Source: Newswires

 

15th November 2017

 

BoC’s Wilkins says Inflation is the only target for BOC

 

- Relationship between slack and inflation is intact

- Wage growth is lagging expectations globally

- Still slack in the labour market 

- Believes wages will start to rise

 

Source: Newswires

 

BoC’s Wilkins says the Canadian economy is progressing strongly

 

- Growth is broad based

- Less Monetary Stimulus is likely to be appropriate, but will be cautious about it

- Reiterates BoC is data dependent

- Notes uncertainty around NAFTA

- Increase in Household Debt is a factor in their decisions

 

Source: Newswires

 

14th November 2017

 

BoC’s Wilkins says the Canadian economy is progressing strongly

 

- Growth is broad based

- Less Monetary Stimulus is likely to be appropriate, but will be cautious about it

- Reiterates BoC is data dependent

- Notes uncertainty around NAFTA

- Increase in Household Debt is a factor in their decisions

 

BoC’s Wilkins says Inflation is the only target for BOC

 

- Relationship between slack and inflation is in tact

- Wage growth is lagging expectations globally

- Still slack in the labour market 

- Believes wages will start to rise

 

Source: Newswires

 

BoC Senior Deputy Governor Wilkins says that one reason for the Bank's caution is desire to avoid policy reversal

 

- During periods of uncertainty like today, a cautious approach to monetary policy may be prudent

- Caution has its limits; there are complex trade-offs, including those related to financial stability

- Uncertainty is not a reason for paralysis in decision making

- Notes that the bank is focused on wage & output data

- States that the BoC will be nearer to the effective lower bound more often than due to lower neutral interest rate

 

- BoC Deputy Governor Wilkins notes that at the time of the BoC's rate hikes there was no sense that the Bank thought the pace of growth was sustainable

 

- BoC’s Wilkins notes that it is prudent for the Bank to take uncertainty about inflation seriously and watch the data

 

28th November 2017

 

Bank of Canada Governor Poloz says that improvements in the labour market and stronger wage growth should help households adjust to higher interest rates

 

Source: Newswires

 

15th December 2017

 

BoC Governor Poloz says "increasingly confident" economy will need less monetary stimulus over time

- Current policy setting clearly remains "quite stimulative" 

- Mechanical approach suggests monetary policy should already be less stimulative

- Downside risk to inflation forecast is slack in labour market

- Economy right now is at the  sweet spot stage of the economic cycle

- Encouraged by signs of higher wages and increased labour participation by youth

 

BoC's Poloz says we put stock in data showing higher wages but that does not mean there is no slack left

- If there economy is near potential but still in a transitional phase, it means potential output should grow a little faster than the assumption, downside risks to inflation forecasts. 

 

BoC's Poloz says we want the economy to run hotter for a while to use up excess unemployment

 

Source: Newswires

 

January 2018

 

Bank of Canada says uncertainty about future of NAFTA weighing increasingly on the outlook, trade-policy uncertainty to reduce level of business investment by 2% by end-2019

Says


- Will remain cautious considering future policy adjustments and will be data dependent.

- Economic outlook expected to warrant higher rates over time, some continued policy accommodation will likely be needed to keep.

 

BoC Governor Poloz says neutral interest rate is somewhere between 2.5% and 3.5%

Source: Newswires

 

BoC Governor Poloz says productivity has been positive and suggests there is more room for wage growth

Source: Newswires

 

BoC Governor Poloz says a stronger economy means rates can move closer to normality

Source: Newswires

 

BoC Governor Poloz says “we don’t know” whether the end of NAFTA would mean the end of tighter rates

Source: Newswires

 

BoC Governor Poloz says he is more confident on outlook given a string of positive surprises

Source: Newswires

 

 

September 7th 2018

 

BOC Dep Gov Wilkins says reiterates BoC guidance, says higher rates will be warranted to reach 2% inflation target, will continue to move rates gradually.

 

Wilkins says Trumps protectionism creates risks to the upside for inflation, especially when the economy is operating near full capacity.

 

Implications of current trade environment dominated the BoC governing council's discussions at its September meeting;  BoC discussed whether gradual approach to rate hikes was still appropriate, and agreed it was.

 

- says there may be room for economy to grow without stoking inflation
- says policy Interest rate is still low
- Seeing little evidence that inflation expectations are unanchored
- Says NAFTA is the biggest risk to the outlook, though is not the only risk BOC is monitoring

Source: BoC

Analysis: Barclays and Goldman Sachs see the Canadian Dollars getting stronger over the next 12months as the Bank of Canada continues to raise interest rates.

Only risk to this process is Trumps threats to slap 25% tariffs on all Canadian Automobile exports to the US. Which is

have a negative impact on the Canadian economy and could force the Bank of Canada to halt its rate hiking cycle.

 

September 7th 2018

 

BoC Governor Poloz says rates will continue to raise rates to the neutral level, adding that the BoC will remain dependent on incoming data

  • In face of uncertainty, BoC cannot operated monetary policy mechanically and that policy becomes a matter of risk management

  • BoC cannot know to what extent NAFTA talks and global trade policies are slowing business investment decisions

 

Source: Newswires