Poloz is speaking in a press conference following today’s decision to remove the hawkish bias in the statement (the headlines will update in real-time):
- Downside inflation risks are more important because starting point is below target
- Even with negative inflation, high household debt would be a consideration
- Asked if risk of rate hike/cut is balanced, says ‘that’s essentially correct’
- Timing of rate hikes has become ‘very clearly later than we thought’
- Exports of Canadian commodities have not kept up with rises in foreign demand
- Quantitative easing remains in the tool kit but our projection is we will not use it
Poloz is making it clear that the Bank of Canada is balanced but he’s saying that whether a cut or hike happens depends on what happens next and that there is no factor that would prompt the BOC to cut or raise rates.
- Currency is not the biggest issue for Canadian exporters
- Worried that exporters competitive losses will persist
- Encourages exporters to invest in competitiveness
Macklem said it’s clear that Canadian companies are adapting to competitive challenges. There are some good reasons on the ground to expect adjustments will happen.
