In today’s rate announcement, the Bank also toned down hints that it may resume rate hikes sooner than expected.
What it didn’t do, however, is remove a key statement from April about future rate increases being necessary.
Here’s more on that, and highlights from the BoC’s public release (our comments in italics):
- “…Some modest withdrawal of the present considerable monetary policy stimulus may become appropriate…” (This phrase debuted in the BoC’s April report. The market was eager to see if it would remain, and it did. Carney wants debt-laden consumers to know he’s ready to lift rates as soon as conditions warrant.)
- “The outlook for global economic growth has weakened in recent weeks.”
- “Some of the risks around the European crisis are materializing and risks remain skewed to the downside. This is leading to a sharp deterioration in global financial conditions.” (Canadian interest rate policy is largely held captive by this factor. The BoC must watch—like the rest of us—to see how EU events unfold.)
- “…(Canadian) housing activity has been stronger than expected, and households continue to add to their debt burden in an environment of modest income growth.” (Near-record-low rates continue to drive this activity.)
- “…Domestic financial conditions remain very stimulative.” (In other words, things would have to get a lot worse to justify a rate cut.)
The benchmark 5-year bond was unchanged following today’s announcement.
Rob McLister, CMT