Poloz speaks in Iqaluit:
- Outlook continues to warrant rates below neutral range
- we can see many areas of encouraging economic growth
- Housing sector taking longer to digest new rules and rates
- Oil sector continues to adjust to lower prices
- Recent data consistent with transitory slowdown view
- Data show 'mixed picture' that must be carefully monitored
- Global economy doing worse than expected a few months ago and Canada is feeling the effects
- Full text
Poloz is his typically-upbeat self here and that initially sent USD/CAD to the lows of the day at 1.3298 but there was minimal follow through. He's saying that weakness will be transitory but he's not promising to shift back to a hawkish stance.
Key passage:
"It is clear that the global economy is performing less well than we believed only a few months ago, and Canada is feeling the effects. In addition, our housing sector is taking longer than previously expected to digest the combined effects of stricter mortgage guidelines and higher interest rates.
That is why we said at our last interest rate announcement in March that the economic outlook continues to warrant a policy interest rate that is below the neutral range, to help the economy work through this downshift in growth and keep inflation close to target. Recent economic data have been generally consistent with our expectation that the period of below-potential growth will prove to be temporary."
The line that " the outlook continues to warrant a policy interest rate that is below its neutral range" is lifted straight from the BOC statement.
