BOC's Macklem: Timing of taper will depend on economic developments
Comments from the BOC Governor
- We are moving closer to a time when continuing to add stimulus through QE won't be necessary
- We will reinvest proceeds from QE at least until we hike rates
- Reinvestment purchases will be around $1b/week
- Length of the reinvestment phase will depend on the strength of the recovery and path of inflation
- Economic recovery is choppy and a lot of uncertainties remain, BOC still expects the economy to strengthen in H2
- Higher inflation caused in part by supply disruption driving up the price of autos and other goods
- Global economic activity is showing solid momentum heading into the third quarter, supply chain disruptions are holding things back in some goods sectors
- We expect global supply chain problems will gradually be resolved, but it could take some time
- Full text
It sounds like he wants to continuing tapering at the October 27 meeting. USD/CAD is a bit lower on this but not materially. Last down 45 pips on the day to 1.2644.
The other big point he's outlining is a plan to eventually let the bonds the BOC bought run off the balance sheet. That's not the kind of selling that the BOE has touched on but it's more hawkish than the Fed, which has shown no willingness to shrink the balance sheet.
Macklem will take questions after the speech. Watch it here: