Bank of Canada deputy Tiff Macklem says monetary policy should look through ‘good’ disinflation caused by increased competitions and improved productivity whereas monetary policy should counter ‘bad’ disinflation caused by weak demand.
So expect any help from the central bank if you’re no longer competitive because your job got outsourced to China. Enjoy the pay cut.
Other comments from Macklem:
- Recent CAD fall my boost some import prices
- Expects relatively small pass-through to core inflation from imported prices
- Total inflation to rise to 2% or the next two years
- Repeats that downside risks have grown in importance
USD/CAD ticked slightly higher on this but I take the opposite opinion. Macklem is saying the BOC doesn’t want to cut because prices are down due to competition.
