Reuters reports Bank of Canada Governor Stephen Poloz said Thursday that the world was in a time when interest rates were likely to remain low and not return to their levels 20 or 30 years ago .
Poloz, speaking to financial journalists before his retirement on June 3, also said that he believed that part of the discussions about the damage that could be caused by the coronavirus epidemic was “a little too serious “and predicted that the bank’s best recovery scenario was still possible.
The Bank of Canada – targeting 2% inflation – has cut its overnight overnight rate three times to a record low of 0.25% since the start of the crisis, and markets do not expect new decision before next year.
“We are in an era where interest rates are likely to remain low for demographic and economic growth reasons. I don’t really know how low they are, but they just aren’t going to look like they were 20 or 30 years ago, “said Poloz.” Central banks will therefore have less room for maneuver. “
Canada’s overall inflation rate turned negative in April and Poloz said, “If he underperforms, we will be easier longer.” This is the essence of the objective (2%) and that is why it is there ”,
– reported Reuters.
We are in a time when interest rates are likely to remain low.
Rates are expected to remain low for reasons of population and economic growth.
I do not know how low the rates will be, but they will not be as they were 20 or 30 years ago; central banks will therefore have less room for maneuver.
If inflation is going to be underperforming “then we are going to be easier for longer”.
Some of the talk about the damage that could be caused by the crisis is “a little too serious, it’s a bit of an exaggeration”.
We are still following the best bank scenario described in the last monetary policy report; says he is relatively optimistic “compared to what the speech is”.
People are too concerned about gdp as the central variable around which everything revolves; really don’t think it will be so difficult to go up the hill after the crisis.
GDP plunges because the economy has been closed, not because of behavioral factors; we should see a very rapid return of production once the shutdowns are over.
He sees a very big question mark over the amount of debt that will increase as a result of additional spending measures to fight the coronavirus epidemic.
The creation of new businesses is expected to increase suddenly after the epidemic is over.
Meanwhile, on the currency front, the USD / CAD was capped on supply for the US session, turning away from the 1.40 grip areas before comments. Instead, the cross tests the support of 1.3940 and the bears progress. For an overview, see here: USD / CAD tests critical support line, bulls prepare for attack