Analysts at BMO look at the 5 ways the Bank of Canada has changed under Poloz and how it has weakened the Canadian dollar. The loonie is slightly lower today and despite the recent rally is still the laggard on the year.
The Bank of Canada meets next week and the big question is how Poloz will react to the stronger dollar and these points could be a guide.
Mr. Carney “pulled no punches” in rejecting the idea of so-called Dutch disease in Canada. Mr. Poloz, in turn, “seems much more open to the possibility that rapid resource development and higher commodity prices (and thus a higher C$) are indeed crowding out manufacturing and other tradable sectors … If a strong currency is a heavy weight on the economy, the bank may favour a weaker C$.”
