Comments from Bank of Canada governor Stephen Poloz 18 April 2018
- Rates may need to stay below the neutral range
- Canada has made considerable progress in last 12 months
- Some progress has been made on the key issues being watched closely by Governing Council, particularly the dynamics of inflation and wage growth.
- Governing Council will remain cautious with respect to future policy adjustments, guided by incoming data
- Assuming our forecast remains on track, it is Governing Council’s view that interest rates will need to move higher over time to keep inflation on target
- This is an intensely data dependent process of risk management
- Rates may need to stay below the neutral range until various forces have dissipated
- Increase in inflation has made us quite comfortable with our outlook
- There are questions on wages still
- By law of gravity, rates will move higher in time (I guess gravity works differently in Canada)
- The pace of rate hikes is a considerable question mark
- StatsCan will start issuing monthly service trade data later this year
Poloz finishes and USDCAD trades at 1.2636.