Bank of Canada's Poloz
- There is no predetermined path for interest rates from here; we're data dependent
- "At a minimum" monetary stimlulus from 2015 is no longer needed
- We will watch financial market developments, including movements in longer-term interest rates and exchange rate
- Appropriate path for rates very difficult to know because of number of unknowns around inflation outlook
- Confident economy has made significant progress, but cannot be certain of how far there is left to go
- Recent economic data clearly point to moderation in second half
- BOC will be watching economic capacity, impact of technology on inflation, wage growth, household debt
- Business investment has been strong across the board in H1
- Confident that economic progress has been made, but can't be certain how much more is coming
- Full text
There were clearly some fears about a hawkish speech. USD/CAD up to 1.2415 on the release.
When you stand back and look at it, it's tough to see Poloz hiking in October after these comments, probably not Dec either. And a December hike was 68% priced in before the release.
One line that wasn't picked up in the Poloz headlines: "There is reason to think that interest rate increases may have more of an impact on the economy and inflation than they did in the past." That's a longer-term dovish statement.
