The overnight target rate has now been static for a record 678 days.
Here were some focal points from today’s BoC statement:
- “Global financial conditions have…deteriorated since April…”
- “Housing activity is expected to slow from record levels.”
- “Canadian exports are projected to remain below their pre-recession peak until the beginning of 2014”
- “The economy is expected to reach full capacity in the second half of 2013”
- “To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate”
That last quote is what the markets keyed in on. The BoC chose to retain this phrasing as a reminder that borrowing costs could jump if inflation threats emerge. That said, we’d likely have to see surprisingly strong economic performance for 3-4 months in a row before that happened.
The next BoC rate meeting is September 5.
Rob McLister, CMT