Poloz speech on limitations of policy offers limited information – TD Securities


“Governor Poloz’s speech on monetary policy offered little insight into the outlook, focusing instead on high-level limitations of the Bank’s current framework,” Andrew Kelvin, senior Canada rates strategist at TD Securities, notes.

Key quotes

“There were few references to the outlook which added little beyond what was delivered in the January MPR. The Governor repeated that current policy is accommodative and that the Bank will look to move the overnight rate into the neutral range over time, subject to the evolution of data.”

“Much of the rest of the speech discussed the history of inflation targeting, while diving into hypothetical scenarios which offered a window into the Bank’s modeling process. For example, when discussing the 2014/15 oil crash, the Governor argued that the Bank would have had to ease by another 50 bps had it not been for fiscal stimulus.”

“His conclusion that monetary policy needs to work in concert with fiscal and macroprudential policy was hardly surprising, but it does take on an interesting dimension ahead of the Federal budget on March 19th and amid Finance Minister Morneau’s recent comments around housing affordability.”

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