Bank of Canada Governor Tiff Macklem said the nation’s economy is flush enough with stimulus to survive the current downturn and doesn’t need additional help from monetary policy.
In an interview with Bloomberg News after a rate decision on Wednesday, Macklem said policy makers considered whether more measures were needed to spur growth — including a micro-cut of their 0.25 per centt overnight policy rate — but determined that “we have a considerable amount of stimulus in place.” The bank is expecting a quick recovery from a first-quarter contraction, a scenario that would eventually require it to pare back asset purchases.
“If the economy plays out in line or stronger with our outlook, then the economy is not going to need as much quantitative easing stimulus over time,” Macklem said. While the central bank has a number of tools it can use if needed to add stimulus, “in our base case we don’t expect that we will need to use them.”
In Wednesday’s decision, the central bank expressed optimism the economy remains on track to fully repair damage from the pandemic by 2023, even as Canada struggles with a wave of new COVID-19 cases and lockdowns right now.
Some analysts had speculated the central bank could turn bearish this week, with a fresh cut to shore up a recovery that is being hampered by a strengthening currency, on top of the worsening pandemic.
In the interview, Macklem said that the stabilization of financial markets has made a small rate cut a viable option, if needed.
“We discussed the degree of monetary stimulus we need, and if we thought we needed more, a micro cut was among the things we could do,” Macklem said by video conference. The bank’s governing council determined it wasn’t necessary, he said.
To be sure, there’s no prospect of any quick withdrawal of stimulus either.
At a separate press conference Wednesday, Macklem said any slowing of the QE program would be gradual. Nor is the the Bank of Canada poised to raise borrowing costs. It’s pledged not to hike its policy rate until economic slack has been fully absorbed, something not expected to happen until 2023.
There are other concerns. With inflation hovering below 1%, Macklem said the central bank is more worried about deflationary pressures than any temporary overshoot of its 2% target.
“We are aiming for 2% but we are going to use the band and we are going to use the risk management framework to get there as quickly as possible,” he said.
The weakening U.S. dollar is another challenge, with any further broad-based depreciation a potential headwind.
“To the extent that is weighing on our forecast and dampening growth in Canada, everything else equal, we’d need more monetary stimulus to get back to our inflation target,” the central banker said.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
