BIC Deputy Gov. Beaudry
- could cut rates further without going into negative territory if economy went into persistent downturn
- other options to combat major downturn include expanding its QE program or using yield curve targeting
- negative rates would not be productive in a Canadian context, barring a dramatically different set of circumstances
- we will not over use QE and overshoot our inflation target; exit target for QE program is tied to our inflation goals
- we will have 3 options to leave QE program. One is to reinvest any proceeds from maturing assets into new ones maintaining level of stimulus. 2nd option is to allow maturing assets to roll off balance sheet. 3rd option is to actively sell the assets
- our choice between the different options would depend on our outlook for the evolution of inflation
- recent positive news on vaccines represents upside risk to the outlook. Could lead bank to reevaluate amount of stimulus that is needed
- 2nd wave of Covid in a Canada will weigh on Q1 economic activity and represents important risk further out if situation becomes much worse
- overall level of economic activity remains largely on track with our expectations
- we have yet to fully analyze all information to shift our assessment of October monetary policy report that slack will not be absorbed until sometime in 2023
The USDCAD has bounced above the 1.2725 level which was the low going back to April 2018. Drilling to the 5 minutes chart, the falling 100 bar moving average comes in at 1.2748 and moving lower. Get above that moving average would tilt the intraday bias a little more to the upside. Closer resistance intraday comes in at the 50% of the last leg to the downside. That level comes in at 1.27367.
