Loonie Loses All 'Surprise Rate Hike' Gains As Canada's Poloz Gets Cold Feet
The Canadian Dollar is tumbling – erasing all the gains following September’s surprise rate-hike – as in his first speech since the, Bank of Canada Governor Stephen Poloz warns there is no “predetermined path for interest rates” and said the central bank will proceed “cautiously” as it assess the performance of the economy from here on.
“Monetary policy will be particularly data dependent in these circumstances and, as always, we could still be surprised in either direction. We will continue to feel our way cautiously as we get closer to home”
“The appropriate path for interest rates in this situation is very difficult to know, because there are a number of unknowns around the inflation outlook”
“We will not be mechanical in our approach to monetary policy”
And on that the Loonie is tumbling…
As Bloomberg notes, Poloz is seeking to balance bringing interest rates back to more normal levels amid the strongest growth spurt in more than a decade, while at the same time not harming the fledgling recovery. Wednesday’s speech — like one given by Deputy Governor Tim Lane last week — may be interpreted as a further attempt by policy makers to pare expectations that the central bank is moving headlong into more rate increases, after hiking borrowing costs twice since July.