Bank of Canada Deems Substantial Monetary Policy Stimulus Still Appropriate

December 4, 2013

Canada’s overnight money target has been 1.0% since a sequence of three 25-basis point hikes in June, July and September of 2010.  Today policy statement notes a stronger-than-assumed housing sector but retains the forecast of a soft landing in that sector.  Meantime, non-commodity exports are disappointing, Canadian oil export prices have eased, the investment recovery has been slower than hoped, and full employment of resources is unlikely before end-2015.  That target date is unchanged from the last policy statement.  Of greater importance, downside risks to inflation appear greater now than imagined before.  One is left to conclude that considerably more time exists before interest rate tightening resumes.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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