Search ForexCrunch

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.