Bank of Canada Senior Deputy Governor Carolyn Wilkins speaking to the Money Marketeers at NY University
Quick Headlines via Reuters from text of the speech :
- 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"
- Monetary policy may respond to negative shocks more aggressively than usual when near the effective lower bound
- Policy is asymmetric in that it responds more aggressively to negative shocks than to positive shocks
- One reason for caution in Canada is greater uncertainty about the strength of the policy transmission mechanism
- Higher household debt has likely heightened sensitivity of spending to rate increases; difficult to know by how much
- Another reason for caution is wanting to avoid having to reverse policy abruptly in the future
- We will be closer to the effective lower bound more often than in the past because of lower neutral interest rate
- Bank particularly focused on data on how wages, potential output are progressing, and effects of two earlier rate hikes
I'll post up anything more in there is a Q&A
Meanwhile, in the Bat Cave, the dynamic duo exercise caution
