Bank of Canada Governor Poloz
- Will continue to raise interest rates gradually towards a more neutral level
- Being uncertain about future does not mean keeping interest rates on hold until inflation momentum begins to build
- Bank will remain dependent on incoming data and other sources of information to guide its decisions
- Bank continues to judge that higher interest rates will be warranted to achieve inflation target
- If we move too slowly on rates, economy could move above capacity limits and inflation could achieve significant momentum, says "we certainly want to avoid this outcome"
- At the same time, given new technologies could be giving economy more room to grow, raising rates too quickly could choke off economic growth unnecessarily
- Recent inflation behavior confirms bank models that show the economy is operating essentially right around capacity
- Although latest inflation data was above target at 2.8 pct, 0.5 pctage points came from temporary impact of higher gas costs, 0.3 points came from cost of air travel
- In face of uncertainties, we cannot operate monetary policy mechanically; rather, policy becomes a matter of risk management
- New digital technologies are making it harder to accurately measure components of supply and demand
- Still assessing how new mortgage guidelines are affecting housing market, believes economy has become more sensitive to higher rates
- Cannot know to what extent Nafta talks and global trade policy uncertainty are slowing business investment decisions
Quick headlines via Reuters
CAD lost a few tics but quickly came back to be more or less unchanged despite the stack of comments. I did say earlier that its not BOC we are watching but Nafta. Seems to be the case indeed. Poloz will have a qnaQ&A session following this.
Oh, and stay tuned I have a video post coming up on CAD and Nafta in just a few moments time
