Comments from BOC Senior Deputy Wilkins

  • While policy rate is 1.75% is low, there is still room to maneuver
  • BOC also has other options such has extraordinary forward guidance and large-scale asset purchases to help economy weather potential storms
  • Higher rates and changes to mortgage rules have cooled housing and household debt but those remain the biggest vulnerabilities
  • BOC doesn't forecast a recession but the trade war and high levels of glbal debt could cause increased financial stress around the world
  • The global context has worsened, increasing risks to the global expansion and chances of financial stress that could spill over into Canada"
  • Stress tests show that Canada's financial system can withstand a severe shock
  • Global banking system is more resilient than it was a decade ago
  • Full text

The market is focusing on the line that there is 'room to maneuver'. I don't think she's sending a signal here but any time there is talk of cuts (and QE), that's the kneejerk. USD/CAD touched a session high of 1.3264 from 1.3230 before the comments.