Here are some of the key highlights from the BoC Governor Stephen Poloz’s prepared speech about the financial markets and implications for monetary policy at the Canada-UK Chamber of Commerce, in London.
“¢ Higher long-term bond yields, rising USD and recalibration in equity markets are symptoms of normalization.
“¢ Investors can no longer expect long-term yields to be suppressed by extraordinary monetary policies.
“¢ A decade of monetary policy action is finally taking deflation risk off the table.
“¢ It is only natural to expect more volatility in stock prices as support is removed.
“¢ If investors now think expected earnings need to be discounted by higher rates, it lowers the price they are prepared to pay.
“¢ A key implication of divergence of growth between the US economy and the rest of the world is stronger USD.
“¢ This has caused strains for some emerging economies, which will continue.
“¢ Repeats that trade risks are two-sided; current disputes could be resolved, providing a new source of lift for the global economy.
“¢ Repeats interest rates will need to rise to meeting inflation target; says the bank will pay close attention to international trade developments.
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