CIBC World Markets reacts to the BOC speech
From CIBC:
It may have a struck a familiar tune, but Governor Poloz's comments today again suggested that low rates are likely to be reality for quite some time in Canada.
With the economy continuing to face headwinds, the governor highlighted the need for monetary policy to remain accommodative. The degree interest rate accommodation is judged to be in the 2.5% range, with the BoC estimating that the non-inflationary neutral rate for Canada is around 2.75% to 3.75%. That could be considered a fair degree of stimulus, and with Poloz highlighting that the Bank will be eying the "full effects of fiscal stimulus", it suggests that the bar for another rate cut remains, despite a more dovish leaning in the last policy statement. Aside from that, the governor highlighted the benefits of infrastructure to long-term growth and also urged province's to remove trade barriers.
A bit less than one could have assumed given the tone of the last statement, and with Q3 growth set to rebound and stimulus dollars still to be spent, we continue to see no change in monetary policy at least through the end of this year.
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