New Governor Tiff Macklem
- reiterates 0.25% overnight interest rate is effective lower bound
- Bank of Canada's 2% inflation target remains its beacon during the economic crisis
- structurally low interest rates and scale of the Covid 19 shock are having a profound impact on how the bank implements its monetary policy framework
- coronavirus pandemic has created a fog of uncertainty that has greatly complicated our ability to generate a clear outlook for growth and inflation
- negative rates could lead to distortions in the behavior of financial institutions
- pandemic is likely to inflect some lasting damage on supply and demand
- recovery from coronavirus pandemic crisis will likely be prolonged and bumpy with potential for setbacks
- BOC expects supply will be restored more quickly than demand putting a lot of downward pressure on inflation
- banks main concern is to avoid a persistent drop in inflation by helping Canadians get back to work
- economies productive capacity will take a hit that will persist even after coronavirus contaminant measures are lifted
- as economy reopens should see a very strong job growth some pent-up demand should give a boost to spending but adds uncertainty will linger
- reopening from coronavirus will be uneven and it will disrupt supply chains and have an impact on both the volume and pace of Canadian exports
- consumer price index data isn't fully reflecting Canadians inflationary experience
- bank is working with Statistics Canada to understand implications of shifts in spending patterns
The USDCAD has corrected off lows and retests the broken 200 hour MA at 1.35587. The earlier fall below the 200 hour moving average was the 1st since June 11. Moving back above that level and then the 100 hour moving average 1.35718 would certainly disappoint the sellers. So far sellers are leaning against the resistance level.
