“The lower neutral rate of interest means central banks have less room to stimulate the economy by cutting rates,” Bank of Canada Senior Deputy Governor Carolyn Wilkins said on Wednesday while refraining from commenting on the near-term policy outlook. “Central banks have 200 basis points less room to stimulate in the traditional way,” Wilkins argued.
These comments were largely ignored by market participants and the USD/CAD pair was last seen trading at 1.3285, adding 0.1% on a daily basis.
Key quotes
“Canada has avoided secular stagnation, has strong fundamentals including the central bank’s policy framework.”
“Still plenty of uncertainty in the global environment, including tensions in the middle east and coronavirus.”
“Canada is well-positioned to secure prosperity and avoid a long period of slow growth if the right steps are taken.”
“Canada’s banks are well-capitalized; long track record of achieving 2% inflation targets.”
“Canada can navigate a world with low neutral interest rates. To do so, we need the right monetary policy framework and tools in place.”
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