Some watchers of the Bank of Canada haven’t been paying attention.
Bloomberg News, Reuters, the Financial Post, and the Globe and Mail’s Report on Business (subscribers only) all wrote about the air pocket the Canadian dollar flew into after Governor Stephen Poloz read his opening statement at the central bank’s quarterly press conference on Oct. 19. Everything was fine after the central bank announced that it had decided to leave its benchmark interest rate at 0.5%, while stating that it had cut its outlook for economic growth and indicating that it would take longer to achieve its inflation target. Those two things should have triggered some repricing, as the Bank of Canada’s outlook had materially changed. But that didn’t happen until Poloz said these words about an hour later: “Given the downgrade to our outlook, Governing Council actively discussed the possibility of adding more monetary stimulus at this time, in order to speed up the return of the economy to full capacity.”
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